Throughout history, some towns bask in the warm glow of prosperity, while others languish in shadows of old misfortunes. Among these is Scranton, Pennsylvania, once vibrant and thriving, now struggling under the weight of its past decisions.
Scranton’s decline began nearly a century ago when it became reliant on anthracite coal, which fueled its growth from the late 19th century until the conclusion of World War II. By the mid-1930s, the city’s population peaked at over 140,000—almost double its current size.
However, the dynamic nature of the economy proved detrimental to Scranton. The city’s over-dependence on coal, as pointed out by economist Hyman Minsky, illustrates the idea that stability can lead to future instability.
Lasting Burdens
Following World War II, the coal industry faced a rapid decline as oil and natural gas gained market dominance in the 1950s. This shift triggered a cascading series of negative effects.
Falling coal production led to decreased railroad traffic. By 1957, the New York, Ontario and Western Railway, which relied heavily on its Scranton route, was abandoned. The devastating Knox Mine Disaster of 1959 marked the end of what remained of the mining industry.
The local labor market struggled to recover. As mining ceased in the late 1950s, large cave-ins due to mine subsidence became commonplace.
In 1970, Pennsylvania’s Secretary of Mines observed that it would be more economical to abandon Scranton than to make safe the numerous underground voids left by mining activities. His statement may have held some truth, as entire blocks of homes were often swallowed by collapsing ground.
Scranton’s landscape soon bore the ugly scars of its mining past. Abandoned mines and decayed coal structures became eyesores, while downtown shops and theaters fell into neglect.
Despite various attempts to rejuvenate and revitalize its economy, Scranton has struggled to regain solid ground, burdened by legacies and commitments from a bygone era that continue to weigh heavily on the city.
How to Kill a City Financially
In Scranton, a troubling dynamic unfolds where inept leadership leads to significant fiscal challenges. The city, like many others, experiences the fallout of misguided public finance. As it strives to emerge from financial turmoil, the burden it bears seems insurmountable.
Recently, Scranton announced plans to triple its local services tax as it wrestles with ongoing financial woes. According to the city’s business administrator, this flat tax on workers will increase from $1 to approximately $3 per week.
With a current population of about 76,000, Scranton has elected new leadership, yet still faces a pension system on the brink of collapse. The funded level of pensions for firefighters had dropped to just 16.7 percent as of January 1, 2013, according to an August report by the state’s auditor general, and the city has been under state oversight for 22 years.
What stands out poignantly about Scranton’s financial crisis is how it reflects the struggles of its remaining residents. One wonders if these citizens would be better off if their leaders had recognized their unsustainable debts two decades ago.
By perpetuating the cycle of transferring wealth from those who contribute to those who do not merit it, public officials are effectively following a textbook approach to financially dismantling a city.
Sincerely,
MN Gordon
for Economic Prism
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