The Credit Crunch and the New Economy in Appalachia

What will the world look like once the financial crisis passes? Mark Penn has a worthwhile take on things:

The economic crisis will ... dramatically affect the rising elites, their lifestyles and kids.

For them, Wall Street was becoming the career of choice. But with markets plummeting, will young people now switch to careers in the nonprofit sector helping to combat climate change? Will they go back to founding small businesses after both Big Business and the financial community have proved unreliable employers? The number of law school applications will certainly rise as society becomes even more contentious and litigious, fighting over a shrinking pie.

Maybe we will finally see more young people put their faith and their studies in engineering and science, as people become disillusioned with careers based on moving around information and derivative financial instruments. People will want to make something tangible again, and the government is likely to help by pouring billions into new public works projects.

Telecommuting and four-day workweeks will surge as businesses look to cut back on hours and travel expenses.

Until recently, Americans were buying second homes like crazy — millions of middle-class families have two mortgages. That market has collapsed. But the silver lining will be for first-time home buyers who will find it easier than ever to afford a house, as prices have tumbled by 25 percent or more.And the love affair with the SUV and the truck seems to be fading. Even as oil prices come down from their sky-high summer peak, Americans’ tastes will now permanently shift to smaller (but not too small), higher-mileage cars. Function will gain on form as the most important factor in car purchases.

Full article: http://www.politico.com/news/stories/1008/14531.htmlSome potential ways the above might affect Appalachia, economic development and entrepreneurship:

1. Big business has never thrived in Appalachia- with a few notable exceptions such as mining. Perhaps entrepreneurship will experience some boom times as more and more investors look to put their money in ventures they can more easily get their arms around.

2. Non-profits have always been a thriving sector of our economy. The Christian Appalachian Project is the 12th largest non-profit in the nation. MACED does terrific work, both with the bully pulpit and, more importantly, by putting money where their mouth is. If we’re about to enter a new era of non-profits then it could be good for the mountains.

3. If we see a rise in opportunities for telecommunting then it’ll be good for Appalachia. After all, as Hal Rogers likes to say, we may not have the highways but we do have the skyways… i.e. broadband. (Thanks partly to another non-profit that does great work in Appalachia, ConnectKy.)

4. If cars turn towards the functional and we do, for better or worse, see added costs to reflect the environmental impact of automobiles, perhaps the used car market will boom. Appalachia has historically had a car culture. I have a neighbor who can’t get to Lexington and back but who can take apart and rebuild a motor, transmission, etc. with ease. My wife says he could fix a car with aluminum foil. This surplus talent could find a market someday soon. After all, the carbon footprint for buying a used car is much lower than a new Prius ever thought of being.

Admittedly, predicting the future based on Mark Penn’s work is a little risky. Just ask Hillary. Still, I think some of the above has a pretty good chance of coming to fruition over the next few years as we move away from the credit glut and into an era of more frugality.