Extraction of Goods from Isolated Rural Towns

[Joe Leote]

Interesting take on historic wealth extraction from relatively isolated mountain regions:

Why Appalachia Never Got Rich

The video shows how actual wealth tends to flow from rural areas into more populated areas due to government, finance, and trade customs but also driven by natural terrain or man-made public assets. The concept of Company Towns has dominated my thought because in theory the wage bill for production of public and private goods in the national economy could go onto the books of one entity: The Company Town. The flow of funds for GDP production would reduce to transactions between The Company Town, the dominant wealth claiming households, and the wage-earning households. Socialism would not work for a large Company Town because the democratic voting mechanism falls apart for large groups attempting to manage technological production, political, and financial relations. Capitalism causes the problem where the wage bill must be perpetually smaller than the cost of goods sold to ensure profits. Meaning public deficits or private finance deals fund the aggregate profits.

Joe

[William Meyer]

Read on the hudson bay company a while back - great example of company towns - forts - with the workers providing all the value while receiving very little.  The furs were sold by the bale as a commodity in europe or asia so the company didn't add much value, didn't need to.

Helped keep the current account deficit with china manageable until opium.  Same story for 500 years since the great bullion famine. 

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