In the late 19th century and early 20th century a few large multi-national companies established such a foothold in some Central American countries that they came to dominate the governments and economies, organizing each so that these companies could extract their single limited resource product from those countries with the least amount of expense possible. The companies gave kickbacks to the politicians, and the politicians made policy in favor of the companies. Everything was setup so that the countries’ resource could be extracted for profit, and that profit stayed with the companies. The countries allowed their resource to be extracted and the majority of the population largely gained nothing from it. On the other hand, the politicians and other elite were paid handsomely to make sure the system stayed in place. These oligarchies were dubbed “banana republics“, and this term has become somewhat synonymous with poor third-world countries.
But, the system that was used in those countries is not exclusive to third-world countries. The same kind of system exists today in some American states, such as Oklahoma and West Virginia.
In Oklahoma, the oil and gas industry dominates the economic and political landscape. It represents about 20% of the state’s GDP, far larger than any other industry. However, it ranks only 6th in number of employees. The oil and gas industry’s contribution to the state’s GDP help’s Oklahoma’s total GDP rank 30th in the country. However, Oklahoma’s median income only ranks 43rd in the country. Much of the reason for that difference is because a big portion of the profits from Oklahoma’s oil and gas industry is either leaving the state or being concentrated in a small percentage of wealthy oil and gas executives.
The story is similar in West Virginia, where coal mining represent almost 10% of the state’s GDP, but only counts for 2% of the state’s employment. Coal mining helps West Virginia’s GDP rank 40th in the country, while West Virginia’s median income languishes at 48th in the country. Like in Oklahoma, a big reason for that discrepancy is because a big portion of the profits from West Virginia’s coal mines either leaves the state or stays concentrated in the hands of a small percentage of wealthy executives.
In both states, these resource extracting industries have dominated the political landscape. Oklahoma’s Senator Jim Inhofe is a climate change denier who famously brought a snowball into the U.S. Capitol to “prove” that gobal warming wasn’t happening. Oklahoma’s former Attorney General was Scott Pruitt, whose main focus while holding that post was to defend the interests of oil and gas companies, before taking that same focus to his job as Donald Trump’s EPA administrator. The outgoing Governor of Oklahoma, Mary Fallin, allowed oil and gas companies to write the state’s tax policy:
Executives at Chesapeake Energy, Continental Resources and Devon Energy have proposed a plan for Oklahoma’s taxes on oil and natural gas production.
“The governor is inclined to support the concept and thanks the industry and Legislature for collaborating in the review process we recommended last summer,” Secretary of Finance Preston L. Doerflinger said.
In West Virginia, the Governor, Jim Justice, is a billionaire owner of several coal mines who has used his political influence to refuse to comply with safety regulations and refuse to pay taxes:
Justice owes millions of dollars to the government in back taxes, and unpaid coal mining fees and fines: “His mining companies owe $15 million in six states, including property and minerals taxes, state coal severance and withholding taxes, and federal income, excise and unemployment taxes, as well as mine safety penalties, according to county, state and federal records.”
What good is it to have these industries if all they are doing is taking away natural resources while leaving the state impoverished? Democrats running for office in both states are trying to change that paradigm.
In Oklahoma, the Democratic nominee for Governor, Drew Edmondson is proposing an increase in taxes on the oil and gas industry so that the state can afford to keep schools open 5 days a week:
Democratic gubernatorial candidate Drew Edmondson praised business leaders for recognizing the state has a “revenue problem” but said he would raise taxes on oil and gas production higher than proposed by the Step Up coalition.
“I think what they have done is commendable,” Edmondson said of the revenue and reform package unveiled last week by the group of business and civic leaders.
“I really appreciate the business community stepping up and taking a look at these problems and making recommendations. Secondly, I totally appreciate the fact they have acknowledged a revenue issue, recognizing as Governor (Mary) Fallin did in her seventh year in office that we aren’t going to fix this problem with ‘efficiency’ and ‘waste’ — that we have a revenue problem. And for the business community to recognize that and acknowledge it, I think is major. It’s a major development.”
In West Virginia, the Democratic nominee for U.S. Congress, Richard Ojeda, a 24 year military veteran, spearheaded a fight by the state’s teachers to get better pay, and is pushing for marijuana legalization to add diversification to the state’s economy, an opportunity for the poor to earn some income, and provide a safe alternative to opioids. He gave an impassioned interview covering these topics, and more, that is definitely worth a watch.
It is well past time for the politicians who are supposed to represent the people of Oklahoma and West Virginia to start actually representing the people of Oklahoma and West Virginia, and not just the industry executives for oil, gas, and coal. The current politicians representing these states are no better than the Central American politicians from a century ago who allowed their countries to be turned into banana republics.