Has Appalachia Lost Fewer People Than East Germany?

This Depends On Your Definitions

Update: Krugman has responded. Dr. Krugman, if you’re reading this, I must say I’m confused. The article below is not an “enraged response.” The article is indeed long, but I’m not sure “furious” is the right adjective. I’m curious what made it seem so furious. Regarding an attack on motives, I agree it’s generally bad to do so, hence why I explicitly said that motives were irrelevant to the conversation. Again, I’m perplexed more than vexed here. It’s odd to me to be characterized as having a “hair trigger temper.” I will take pretty much any excuse to write a blog post about a very nerdy demographics topics. In the meantime, I do wish you’d actually responded to the post itself.

There’s a running debate going about how to respond to the concerns about trade raised by Trump and his most enthusiastic supporters. As a professional working in trade policy, I have strong opinions on this. But I’m going to ignore those views of mine and skip right to a way more interesting question than trade.

In his most recent salvo of this debate, Paul Krugman dropped the casual remark that East Germany is more depopulated than Appalachia. This stood out to me because, as regular readers know, collapse, despair, and depopulation is sort of my jam, especially Appalachian population trends.

Now, an advance warning here: Krugman’s claim, that East Germany’s population decline since reunification has been much more severe than Appalachia’s over the same period, is correct. It is, however, specious. Of course East Germany’s population decline has been more severe than Appalachia’s on the whole: Appalachia is a vastly larger and more diverse region than East Germany, and migration into and out of Appalachia has been possible for centuries. A more useful question is not “raw depopulation,” but the degree to which a given region has “fallen behind.” And, for the record, even on raw depopulation, the real answer is highly subject to how we specify the question.

Defining the Regions

Because I don’t want to argue the point, I’m going to accept the definition provided by the Appalachian Regional Commission for Appalachia: 430 counties across 13 states, amounting to 205,000 square miles of land. Now, in truth, this is a laughably vast definition of Appalachia with a historical provenance in Senatorial attempts to get their states allotted some pork. But, anyways, let’s jump to it.

How does Appalachia compare against East Germany, geographically-speaking?

Okay, so right there we’ve got a problem. Krugman wants to talk about regional economics, but failed to think about, huh, I wonder how comparable these regions are? How similar is a small, post-Soviet enclave with a densely settled, highly-urban population to a vast, mountainous region that is disproportionately rural or semi-urban?

Notably, geographically large areas are, all else being equal, more likely to have a very heterogenous economy, and thus wide internal variation in population trends. As we’ll see, this is in fact the case.

As one might expect from a vastly larger area, Appalachia was somewhat more populous than Eastern Germany in 1990.

However, Appalachia on the whole ends up with a population density of about 105 people per square mile. Eastern Germany ends up with about 435 people per square mile. For comparison, West Germany had about 640 people per square mile in 1990, while the non-Appalachian US had about 63 people per square mile… wait, what? Even when we drop out Alaska, it’s still 83 people per square mile.

If Appalachia is so rural, what’s going on here?

Simple: the rest of the US includes the huge unpopulated or lightly populated areas west of the Mississippi and east of the Sierra Nevada. This area blasts national density metrics to kingdom-come. Tellingly, just 7 states in the US have population densities over 400 people per square mile.

Why does this matter? Simple: a very compact population can move more easily, which will make population trends more volatile. That is, if you have to move 500 miles to reach the next major economic hub versus 50 miles, you’re less likely to make the move. Higher transportation costs, for which distance can be a rough proxy, will tend to reduce the role of the most volatile part of population change: migration. In Appalachia, which is fairly isolated from most major metros and which has poor infrastructure, migration can be very costly. In Germany, the government provided aid to migrants, and the distances involved were very small.

Okay. Let’s look at population trends for our two regions now.

Bam! There’s Krugman’s moneymaker graph. East Germany has been in decline for decades and, look! All those Appalachians are just a bunch of whiney belly-achers! Population’s been growing! Sure, it was a little slow in the late 60s, but it’s been chugging along at a good clip since!

Let’s Be Civilized

Let me digress for a second. I’ve written before about the need to improve the quality of our public discourse, and I firmly believe in this. I see this as a teaching moment. Krugman and those who believe him want to believe that the fears of Appalachians (or Rust Belters, or what have you) are overblown, that life has not been so bad for them as it seems. Whether this is an intentional disparagement of Appalachian concerns or accidental matters to God, but not to society, which receives bad information either way. Krugman cites an ARC report as part of his claim relative to Appalachian depopulation. The report, as best I can tell, does not support his claim. Here’s a chart that relates, however:

Right there you can see the problem with talking about “Appalachia.” There are huge variations within Appalachia! Are we talking about the Atlanta exurbs? Alabama and Mississippi? western Pennsylvania? Southern West Virginia? These places all have very different experiences.

The point here is that there’s now a factoid out there which provides an unwholesome mixture of true and false information. True: by one definition of Appalachia, its population growth has been far stronger than that observed in East Germany. False: this definition of Appalachia has any connection to what is meant by the common use of the word “Appalachia.” When we talk about “Appalachia,” very few people mean “Atlanta’s suburbs.” That would be ridiculous.

My goal here isn’t to do a “technically true but actually false” kind of fact-check. Rather, my assumption is that people who’ve got the impression that Appalachia is declining are not making it up. There’s some basis in fact somewhere. My goal is to find that basis, and then we can decide, once we fully understand what’s causing people to feel the way they feel, whether the fact matters or not.

The goal of argument is not to leave your opposite humiliated and beaten, but to have revealed the best possible version of their argument as insufficient. Until you’ve beaten the strongest possible version of your opponent’s view, you haven’t actually won.

So let’s find the strongest possible argument for Appalachian population decline.

Comparing Comparable Regions

There is data on the historic population of German states and Appalachian counties. I have assembled it.

German Federal States are, on average, about 8,600 square miles. East German states are about 7,000, west German ones are about 9,600. US states are, on average, about 74,000 square miles, so far from comparable.

However, if we divide the 205,000 square miles of Appalachia by 13, for the 13 states that have at least a sliver of it, then we get an area of about 15,800 square miles. This is closer to comparable to German Federal states, but still not quite right.

I have hacked up these states, separating out major metro or quasi-metro areas like Pittsburgh, Atlanta’s exurbs, etc. The result is a set of 22 Appalachian sub-regions, averaging about 9,300 square miles each, which is pretty comparable to German states, though still a bit large for East German states. However, I was wary to go any smaller, as this yields, in 1990, regions of about 1 million people, while East German states have about 3 million people. Below 1 million, we’re talking about pretty small regions, which gets a bit too cherry-picking-ish for me.

Now, given we’re talking about dozens of regions, I won’t give you a line graph of all the population trends but, if you want one, let me know. Instead, let’s just look at the % change in population since 1990, by region. States listed are limited to just the Appalachian counties in those states.

The chart above shows us that, again, there’s huge variation within Appalachia. The peripheral Appalachian metros and further-flung areas broadly seem to have faster growth than the core Appalachian regions, much as the West German states have faster growth than the East German ones.

But note something curious: the fastest growing German states would be among the slowest growing US regions. Huh. That’s weird. Wonder what’s going on?

Let’s make a relative chart, seeing how each region compares to its respective nation. For simplicity, I’m gonna drop the West German states and the Atlanta exurbs, which should make the chart easier to read.

In that chart, you can see the various regions by their population change since 1960 and 1990, minus national population change is 1960 or 1990. So that -93% for Pittsburgh doesn’t mean Pittsburgh lost 93% of its population since 1960; it means Pittsburgh’s population has declined 14.5%, while national population grew 78.6%.

What this chart should make crystal-clear is that the relative decline in Appalachia has been of comparable severity as the relative decline in East Germany. The only reason Appalachia’s decline is less severe is because US population growth generally is stronger than German population growth. This stronger growth is, in turn, largely driven by immigration and the fertility of immigrants, as well as by the US’ still substantially younger native population than Germany’s.

In other words, Appalachian population growth lags behind the nation by about the same amount as East Germany lags behind Germany.

So, those folks fretting about Appalachia facing demographic decline and the region being left behind aren’t making it up. They’re seeing just as much relative slowdown in population growth as East Germany is!

This is true even if I compare all of Appalachia to all of East Germany; for 1960, Appalachia’s decline is a bit worse; for 1990, East Germany’s is a bit worse; but in both periods, they are quite comparable.

But let’s get even more granular. I haven’t got county-equivalent data or maps for Germany, but we can still look at county-data for the US, right?

McDowell County, WV has lost 43% of its population since 1990. It is the most depopulated place in America. The cluster of orange-ish colors stretching from the TN/KY/VA borderlands up to, essentially, northern Maine is a major segment of depopulation. Another depopulation swathe can be seen from the Mississippi/Yazoo Delta region, across the former cotton belt up to North Carolina. A third major region can be seen across the farm states of the Great Plains and midwest.

We can also represent this in terms that more clearly slow where population losses have been most severe by using a dot map. Each dot represents one county. Orange dots show decline, sea-green dots show growth, dot size shows the scale of growth or decline.

Viewed this way, you can see that although the rate of decline in many western counties is fairly severe, the overall amount of decline is often smaller, and spread over a very large area. Central and northern Appalachia, meanwhile, have seen substantially larger county-level declines in many cases, and concentrated in a narrower area.

So, to be clear, yes, Appalachia’s population has seen severe decline, especially compared to the rest of the US.

Imagine, my most-likely-not-Appalachian-reader, that you reside in southern West Virginia, where, since 1950, the population has declined by 10%, with 1/10 of that decline coming in just the last 5 years. Imagine that, sometime in the last decade or two, funerals started to outnumber baptisms in your local church, and, nowadays, you’re lucky to see one family with kids amidst the dwindling crowd of gray-heads. Imagine you haven’t held a child born in your community since Bush was President, because the young people either moved away physically, or moved away emotionally, detached from their families by broken marriages, changed communication norms, and the ravages of drugs, alcohol, and unemployment. Imagine that the only new growth in your region you do see is in the nearby metropolitan hub, among people who don’t worship at your church, sometimes don’t speak your language, eat different food, patronize different local businesses, vote for different leaders, and altogether seem to have little in common with you. Imagine that marriage and fertility are falling, so fewer of these people are integrated into the local community by new family ties.

My point here isn’t strictly about immigration, as most immigration actually heads towards areas of average or better population growth. Neither am I saying depopulation is entirely bad: I would argue the more severe depopulation of southern West Virginia than eastern Kentucky is a partial reason why southern West Virginia is more prosperous than eastern Kentucky by most measures. Indeed, we should seek to give Appalachians more opportunities to advance their ambitions elsewhere, not fewer… we just also need better ways to attract inflows into Appalachia.

Rather, I am arguing that the perception of a depopulating Appalachia is not wrong. It’s correct. Certainly if you live in McDowell County, West Virginia, it’s correct. But more broadly, even places not properly declining in population are nonetheless declining rapidly relative to the rest of the nation. And they know it! Appalachians are well aware of how the rest of the nation is plowing on ahead into the future, without them. They (in my opinion correctly) believe that much of their falling-behind is because they have been exploited, manipulated, and mistreated by generations of policymakers and elites in urban centers, state capitals, and Washington, DC; though Appalachians should do better at acknowledging their own shortcomings and culpability as well.

Do you know what major American ancestry-group is declining faster than any other? Scotch-Irish. The vaunted origin-ancestry of Appalachia lost nearly 2.2 million self-identifiers from the 2009 ACS sample to the 2014 ACS sample, marking a 42% decline. The only ancestries to lose more people were German and English; much of the decline in those two groups was centered around Appalachia.

Want to guess the fastest-growing ancestry group in America? I bet you guessed “Mexican” or “Chinese.” Those are solid guesses; Mexican is #3, at 11% growth with 2.4 million new self-identifiers.

The correct answer, however, is “White/Caucasian.” The number of Americans self-identifying not as English or German or Scotch-Irish but “White” as their ancestry, as distinct from just their race, rose 47% from the 2009 ACS to the 2014 ACS, with 3.9 million new identifiers. The second largest grower was “American” as an ancestry; this is un-hyphenated American, mind you. There are 2.9 million new “Americans,” giving 15% growth.

These two ethnicities are disproportionately located in areas where the Scotch-Irish have declined, namely, the upper South, rural western areas, and, especially, Appalachia and the rural Northwest (Oregon and Washington).

Why would somebody call themselves ancestrally white or American? There are many reasons, but here’s one option: because they never received stories about being anything else. They grew up in environments where nobody talked about their German lineage or their Polish immigrant ancestors; largely because intergenerational ties of family, faith, and community broke down. They grew up in a broken family, or a family detached from extended kin, or a family detached from all stable community life.

What’s the point of all this?

Regional Economics Is Hard

I want to turn back to Krugman’s article, and revisit the context in which he offered his dubious Germany-Appalachia comparison:

Let’s keep in mind that East Germans couldn’t migrate to West Germany for decades, and that, when the wall came down, it meant millions of people could suddenly move a very short distance west and reap enormous financial rewards, and that, furthermore, the German government subsidized this move by providing special aid to migrants. So, yes, East Germany depopulated, and to an extent that’s a good thing.

But Berlin has now stabilized, and is growing again! Why? Oh, I dunno, perhaps because Germany moved its capital and government bureaucracies into the formerly depressed east. Areas where the government shells out extra billions year in, year out, tend to do all right for themselves. Want to take a guess at government employment in Appalachia? And, to be clear, East Germany has shown a huge amount of convergence with West Germany. Germany responded to its huge imbalance by relocating a huge amount of public resources eastwards, with the result that the East has, gradually been converging with the west. Their strategy is working. Likewise, post-War efforts at promoting economic development in the south through military-industrial-related Federal spending and base opening were very helpful in developing the New South.

Broadly speaking, governments neglect spending the kind of money in Appalachia that could support enduring prosperity. How many state capitals are in Appalachia? 1 or 2, depending on how you count Harrisburg, but only one is definitively in Appalachia. There are 13 states in the Appalachian region. At most 2 capitals.

How many military bases are in Appalachia?

Yellow is approximate bounds of Appalachia’s main area as I define it.

Looks like a bit of a thin area for military bases, despite Appalachians being prime recruiting material for the military.

The area does get government spending — on roads and other ARC projects, which does some to help the region, but a lot to accelerate its depopulation. Meanwhile, the Federal government subsidizes the outmigration of students to universities around the nation that, surprise surprise, aren’t usually located in Appalachia. Well how about that!

To be clear, the US government does have regional economic policies: we just don’t call them regional economic policies. Subsidies for students to consume higher ed are subsidies for towns with universities. The mortgage interest deduction is a subsidy for homeownership generally, which means a subsidy for areas where the obstacles to homeownership are low (suburbs of major cities). Military spending is a subsidy to areas with military bases and contractors. Ag spending is a subsidy to places with intensive agriculture. The list could go on. There are no non-regional subsidies. Even the EITC is a regional subsidy: it subsidizes the choice to work, which often depends on the availability of jobs, which can induce migration. Many of these regional subsidies, like the EITC, are beneficial.

Appalachia does get a lot of government subsidies related to poverty. We do a very good job paying Appalachians to be poor, hungry, and disabled. If they could pose for some poverty-porn photo-ops, all the better.

That’s flippant and cruel of me to write, but it has to be said: handouts are not the equivalent of government investment in productive assets! Quit dumping so much cash into Appalachia in handouts that incentivize intergenerational transmission of poverty, and, instead, maybe invest in things that will give Appalachian communities enduring prosperity: universities, national labs (like the Green Bank Observatory, for example), agency relocations, energy generation facilities, and other lasting investments can help reshape these local economies. No economy was ever launched into prosperity by disability checks. Many have been by economically productive large-scale institutions.

I’m a free-market guy. I want smaller government on the spending and the taxing side. But we also have to recognize that government spending is geographically non-neutral, and the composition of government spending is economically non-neutral. Spending on productive assets (say, chartering a new university) in poor places (say, in eastern Kentucky) is almost certainly a more productive use of money than spending the same amount to provide benefits to mostly non-poor kids (subsidized student loans) so they can subsidize mostly non-poor locations (university-dense cities).

The idea that Appalachians would snootily turn up their nose at a serious Federal investment in their prosperity is so ridiculous as to border on offensive. Nobody in Kentucky is going to pitch a fit if you relocate the Department of the Interior to Middlesboro. Nobody in the cotton belt of Alabama will moan and grown if you charter a $1 billion university in their county. That’s ridiculous. Normally I wouldn’t even engage with this kind of suggestion… but he’s a prominent writer and I worry this view will take hold, that Appalachians (or Rust Belters) are so angry at elites that they’d reject beneficial investments.

A close cousin of this idea, that poor people voted against their interests in voting for Trump/Republicans, is very common. But the key point I want to make here is that Appalachians and Rust Belters don’t see “stable post-tax-and-transfer income” as the barometer of success. Respect is a huge part of success for them (us), and market income matters too. Put more formally, the median utility function in Appalachia is not U=F(Real Net Personal Income). It’s U=F(Real Net Personal Earnings, Social Standing).

Handouts boost income. They don’t boost earnings, and they can diminish social standing. Thus, for many Appalachians and Rust Belters, welfare is not seen as welfare-improving, even by its beneficiaries. This explains that guy you see on Facebook who complains about the “Obama economy” one day, and the next moans about how hard it is to get his disability check. Is he to some extent ignorant and hypocritical? Yes, to a degree. But his behavior is very rational if you think that his complaint about the “Obama economy” or “welfare queens,” when he himself receives welfare, is about the lack of improvement to real earnings, as well as the diminished social standing brought about by dependence on the dole. He wants the disability check because he wants to be able to maintain his basic standard of living; but he resents it, because it diminishes his social standing and doesn’t qualify as earnings. This hypothetical person isn’t just some entitled white idiot on your Facebook wall whom you should mock; it’s an internally consistent worldview that, when you actually stop and think about it, is not prima facie unreasonable or horrible.

Appalachia needs higher wages and more employment, i.e. greater labor demand relative to supply. Migration of firms and people helps bring this about, hence why areas of more severe historic out-migration often have better outcomes today. But more broadly, another solution would be for the Federal government to reduce its subsidies-to-stay (i.e. subsidies whose real value increases as the recipient leaves in lower-valued areas), while driving up demand through re-allocation of existing spending via founding of institutions, relocation of Federal workers, etc. The goal should be boosting labor demand in Appalachia. Specialized low-tax zones are an unlikely way to do this, as the problem in Appalachia is not that local costs of production are excessively high, per se. The problem is that there’s just no local market to sell to. Appalachia is far away from everything, and the local market is shrinking. For businesses to see it as a valuable market, you don’t just need to lower costs, you need some kind of signal that, come hell or high water, the market is going to grow. A Federal commitment to a dozen new R1 universities in small cities in the region would be a serious step in that direction, as would new military bases, or energy projects, or research labs, or a relocated Federal agency, or anything like that.

Few progressives get on board with this program because many modern progressives are all-in on the cult of urban productivity. They think that distributing universities, Federal agencies, and other knowledge clusters will reduce productivity and make us all worse off. I think that’s ridiculous. But, here’s a compromise: try relocations in some poor areas and not in others, and see how all areas involved perform. I’m happy to start with a small-scale experiment.


Krugman says:

Here’s are some answers.

Check out my Podcast about the history of American migration.

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I’m a native of Wilmore, Kentucky, a graduate of Transylvania University, and also the George Washington University’s Elliott School. My real job is as an economist at USDA’s Foreign Agricultural Service, where I analyze and forecast cotton market conditions. I’m married to a kickass Kentucky woman named Ruth.

My posts are not endorsed by and do not in any way represent the opinions of the United States government or any branch, department, agency, or division of it. My writing represents exclusively my own opinions. I did not receive any financial support or remuneration from any party for this research.