LESSON ONE: The Resource Curse
Why is that lands richest in natural wealth are the poorest financially?
More specifically: If mining is so good for the economy, then why isn't the Upper Peninsula one of the richest places in the country? Along with West Virginia, right?
The phenomenon known as the Resource Curse or the Paradox of Plenty is well-documented. Going all the way back to the year 1711, the British newspaper The Spectator observed that, "...in countries of the greatest plenty there is the poorest living." Also called the Dutch Disease in reference to Holland's 1959 discovery and exploitation of a large natural gas field actually leading overall economic decline, the pattern is clear: the areas with the highest abundance of natural resources exhibit the worst economic outcomes, the highest rates of substance abuse, and the greatest unwillingness to connect the dots.
These are the reasons:
Extractive operations tend to be owned by outside corporations with no long-term vested interest in the wellbeing of the local economy and ecology.
- The frontlines of extraction typically have no secondary industries to make use of raw materials in the immediate locality, and thus wealth is exported to financial centers hundreds of miles away.
- When the raw material in question is depleted or no longer profitable, these outside-owned operations board up shop, leaving behind a devastated ecology and a void in the economy.
- And the bust is nearly always worse than the boom. To take mining as an example, the most comprehensive study ever done on the impacts of mining on rural communities found that mining led to positive outcomes in only 29% of cases, with most of those coming from before 1982. More recent research shows that, specifically with copper mining, in 89% of cases any short-term job growth is vastly outweighed by long-term harms to outdoor recreation and amenity sectors. We'll explore this research and more later on.
Boom, Bust, and Dust...
The Pattern is Clear
Phil Bellfry's work reveals that the UP’s “development” was tied to resource extraction in four areas: fur, copper, lumber, and iron ore. The capital to exploit these resources came from Boston, Pittsburgh, Cleveland, and Chicago, and it is far and away these areas which were enriched, while the Upper Peninsula suffered the ecological and economic devastation.
THE COLONIAL FUR TRADE
Control of the Colonial Fur Trade passed from French hands to British and finally to American in 1812. Trappers worked months-long shifts to pay off debts, while Native Americans were contracted largely through payment with whiskey. By 1834, the mighty beaver — creator of wetlands — had diminished to near extinction and demand in Europe was faltering. Native Americans, having lost a valuable food source, suffered from heavy addiction to the whiskey, while white settlers quickly vacated the region of the collapsed trade.
From The Detroit Gazette (January 4, 1822):
"How much more consoling it would be could we feel that even a small portion of our fur could return to our territory in cash to be expended in erecting mills. Instead, all furs which are collected by our merchants go as toward payments of debts…”
As we'll see, this pattern of rapid and devastating resource exploitation to the enrichment of financial centers hundreds of miles away will only continue.
COPPER
The 1840s copper rush to the UP was the first major mining boom of the USA. Capitalists from eastern cities, most notably Pittsburgh and Boston, were the leading investors. In the 1800s, four Boston-owned mines produced 71% of the copper. By 1904, two companies (Calumet and Hecla, and Quincy) composed of Boston capitalists controlled mines accounting for 95.8% of Michigan output. The estimated value of copper shipped from Michigan up to 1946 was $1.5 billion, but almost none of this vast wealth stayed in the Upper Peninsula.
LUMBER
In 1913, 47% of the UP land area was owned by 32 holders, each owning 40,000 acres or more. Cleveland-Cliffs Company (based out of Cleveland) owned 1.5 million acres — 14.2% of the UP. Between 1825 to 1925, out of the 380 billion “board feet” of the original Michigan forest, 244 billion were cut for lumber, and 108 billion were burned or wasted. This represents 92% of the available forest. The value of Michigan's cut timber was ten times the value of all the gold taken out of Alaska — three billion dollars worth of lumber and mill products. But whereas clearcut lands in Lower Michigan could be converted to agriculture for profit, the UP’s geologically rich (very rocky) soil made this impossible.
From the U.S. Department of Agriculture (1929):
“The removal of the forests in most parts of northern Michigan has not been followed by the utilization of a considerable proportion of the land, either for farming or for anything else. Comparatively few of the loggers were permanent settlers; most of them came north in the winter to earn cash wages, which they took south to live on while developing farms in southern Michigan, Ohio, or Indiana. The greater part of the supplies and equipment consumed in exploiting the forests was produced by farms and factories in other regions. Few of the fortunes gained from lumbering were utilized for the benefit of the timber region itself." (FULL REPORT)
IRON
The first Iron company to ship iron ore in 1850 was Jackson Mining Company, based out of Michigan but soon bought out by Pennsylvania financiers. Of the 96 iron mines in the UP in 1950, two-thirds were owned by companies headquartered in Cleveland; 25% were in Chicago and Pittsburgh. The one mining company headquartered in Michigan, the North Range Mining Company of Negaunee, owned four mines which shipped only 1.7% of all the ore from before 1950. All in all, 92% of Michigan iron mines were controlled by Cleveland, Chicago, and Pittsburgh
Twist ending...
The Upper Peninsula: Now a proud colony of Canada?
In times past the wealth was exported to financial centers within the USA, but today — with the exception of the Tilden Mine owned by Cleveland Cliffs — all of the operating or proposed mines are owned by foreign investors, mostly Canadian ventures. Thus, our "internal resource colony" is no longer so internal...
LESSON THREE: The Past is not past...
Modern research confirms that the clear pattern of the Upper Peninsula's past resonates on into this very moment
It's about to get dense, but hang with us!
The most comprehensive study ever conducted on the impacts of mining on rural economies — which examined literally all of the quantitative findings — concluded that mining led to positive outcomes in just 29% of cases, and most of those came from before 1982.
The study concludes: "There is surprisingly little evidence that mining will bring about economic good times, while there is a good deal of evidence for expecting just the opposite."
Due to mechanization and automation, mining's economic contributions are more underwhelming than ever. After a honeymoon period of short-term job growth, a long decline follows. Impacts are especially harmful in areas dependent on outdoor recreation. "Mining increases jobs initially but after a while the adverse effects kick in on the tourism and the amenity economy."
Mining Jobs: a tale of INSTABILITY and DIMINISHING RETURNS
The 19th and early 20th century iron and copper mines detailed in Lesson Two employed tens of thousands of workers, long before most of us were alive. Today when older Yoopers harken back upon the glory days of mining, they are likely referring to the White Pine Mine, which, even at its peak employed only 3,000 workers — no small quantity but certainly a significant drop from historic highs.
But exactly how stable were those jobs? From the Powers Report, commissioned in 2013 by the Friends of the Land of Keweenaw (FOLK):
"Over a 20‐year period the White Pine Mine complex expanded its production, processing, and employment. Employment reached a peak of about 3,000 in 1974 and then plunged by almost 2,000 jobs over the following five years. By 1984 most of the White Pine copper complex had been shut down and only 270 employees worked there. A brief recovery brought employment up to 1,100 between 1989 and 1995 but then employment plunged to only about 100."
This rollercoaster of boom and bust can be linked closely to the rise and fall of copper prices (the dotted red line in the chart). As the price of a metal soars, mines pick up production and hire more workers. But when the price of the metal falls beneath the value required for profitable production, workers must be laid of by the hundreds. This effect, called flickering, is the reason building an economy on mining is like building a house on quicksand.
"Flickering" in action
The proposed Copperwood Mine has cited a value of $2.50 per pound of copper required to keep the mine open (though keeping it profitable is another matter). But what happens when the price of copper drops below that value, as has occurred numerous times throughout history? What happens when rising inflation increases the cost of the subcontractors? What happens when a large new copper deposit is discovered in another country?
The same as with White Pine: as the copper price flickers, so too does employment. Laid-off workers must hang around hoping for the mine to reopen, very often living off of government welfare.
The Human Toll
Boom-and-bust economics is not unlike the fleeting kick of a drug high followed by a long-lasting crash. Unfortunately, this is more than an analogy: mining workers show the highest rates of alcoholism and opiate overdose of any industry, a tragedy which continues to cast ripples even after the mine boards up shop.
The high rate of abuse is in part fueled by the instability of the industry. Volatility of wages and even mass lay-offs can lead desperate workers to seek an easy escape.
So 10,000+ jobs became 3,000, then 1,000... And today?
Eagle Mine in Marquette County employs around 100 direct mine workers. And the proposed Copperwood Mine can't seem to get their numbers straight: in 2013 they projected 250 direct jobs at the mine and mill; now, they've abandoned plans for the mill but are projecting 380 jobs! Given that processing facilities offer more employment than mines themselves (see: Eagle Mine), how is it that Copperwood is now projecting over 50% more jobs?
Regardless, the trend is clear: With better machines, mines need fewer workers. As mechanization and automation increased over the last century, employment plunged across all mining fields. At least they still require a few humans to operate those machines, but one can't help but wonder... with the rise of Artificial Intelligence, will the mines of tomorrow even need us?
LESSON FOUR: We don't need them.
As mining falls, the U.P. rises
The Powers Report shows that "Western U.P. jobs declined by 4,000, or 55%, between 1969 and 2010, but only in the fields of mining, forest products, manufacturing, and agriculture, mostly associated with the closure of the White Pine Mine.
Despite this major loss of land-based export jobs, the rest of the regional economy did not follow the export base downward. Instead, jobs in other sectors of the economy actually expanded significantly, adding 12,100 jobs, a 70% gain!"
...and is rising faster than the rest of Michigan
"Between 1969 and 2010 the increase in real per capita income in the Western U.P. was 73%, nearly on par with the national average of 75%, and far higher than the growth of Michigan as a whole, which was only 41%.
Despite the massive losses in mining jobs, by most measures the regional economy displayed considerable economic vitality. After removing inflation, average income per resident increased 73% between 1969 and 2010."
LESSON FIVE: Action.
As we said in the beginning of this course, the key to a better future is understanding our past.
But one single person is not enough — we need to share this knowledge until it is no longer hidden away in books, reports, studies, and websites, but has entered the mainstream of common sense.
We should be able to stop a person on the street and ask them, "Is it a good idea to go back to basing our economy on outside companies who export the wealth and leave us with the ecological and economic fallout?" and, no matter their age or political affiliation, we should receive the answer, "HECK NO!"
We are preparing materials such flyers, pamphlets, and stickers, which anyone in the U.P. can distribute at their local bulletin boards, coffee shops, libraries, farmers markets, and more. Reach out to us using the form below, and we'll hook you up!
Fast Actions — Non-Residents Encouraged!
Sign the Petition
Contact the Attorney General
Contact the Governor
The petition is an important symbol of collective resistance, which can be used to communicate the scope of our opposition to decision-makers. But signing is just the first step! Please scroll below for more actions.
Contact the Governor
Contact the Attorney General
Contact the Governor
Reach out to Michigan Governor and urge her to do everything she can to halt the Copperwood Project. Then, scroll down for more actions.
Contact the Attorney General
Contact the Attorney General
Contact the Attorney General
Urge Michigan Attorney General Dana Nassel to conduct an official state review of the dangerous Copperwood project. Then, scroll below for more actions.