Presume there is a coal mine. Presume it has been there for a hundred years and presume that it has provided jobs for people who can reasonably get to a coal mine in a reasonable amount of time.

That coal mine is a local resource that can be exploited on the global marketplace. It exchanges a local good - coal - for global resources. You can't eat coal, but you can trade it for food. More generally, coal can be sold to provide for the livelihood of everyone who mines it.

The people who mine it need things other than coal. As a result, ancillary businesses develop surrounding the coal mine - department stores, grocery stores, etc. While the local economy is diversified into most business segments, the economic driver remains coal.

Now suppose the world needs less coal.

The first thing that happens is that there is less value in what comes out of the ground because scarcity has diminished. Companies that own coal mines start doing things like selling them. The people who work at that coal mine will continue to be employed so long as someone buys the coal mine and pays them the same wages, which rarely happens. There will also be layoffs as less coal mined means less people to mine it.

The next thing that happens is that those coal miners buy less stuff. Your ancillary markets suffer - the grocery stores, the car dealerships, etc. Now people who do not mine coal are suffering because of coal prices.

But you can move away, right? Except the only asset most families own is their house... and a house that was purchased in a thriving economy is worth a whole lot less than a house in a failing economy. So you're going to take a muther of a hit just moving away (fun fact: my move last year cost me $9k for a family of three from one metropolis to another) and then another muther of a hit divesting yourself of your house and then you're going to need to find another job and if you're in coal... well, you're fucked. And if you're in sales or other ancillary business... well, there are no markets that suddenly need a whole bunch of ancillary support except other boom industries, like fracking, which is also getting hammered.

So what you're left with is a bunch of people who used to work in a thriving industry in a town that used to be thriving who can't afford to go anywhere else because the thriving was a long damn time ago.

I see. Any particular reason why these weird people gather where they do?

There are weird people of all types all over the place. Certain regions just have certain stereotypes for weird people and for Appalachia, the weird people are Hillbillies. If you were to talk about Florida, you'd probably joke about retirees, of liberal yuppies for the Pacific Northwest. It's just a thing.

I'm failing to see how those are niche industries. I'm pretty sure that the US, much like the rest of the world, still uses those to produce, well, books and cars. Do you guys have coal-to-energy still?

So I'm not super huge into economics or how these things work, but I'll try my best to answer this question, though hopefully someone who knows a bit more than me can expand upon things or correct any mistakes I make.

The problem with coal, lumber, and steel, like other resources such as oil, is that they're largely based upon demand. If something happened tomorrow and all of the sudden people stop buying those goods, a lot of people will get laid off, which creates a huge rippled effect of bills not getting paid and goods not being purchased, which leads to tightening of the belts, which leads to less bills getting paid and less goods being purchased.

Coal - Coal use is dying a slow, yet steady death here in The States for a lot of reasons. The push for greener energy and the cheap abundance of natural gas have made coal suddenly look very unattractive, both from an ethical and a financial standpoint. Coal companies are being hit very hard right now from all sides and the companies that depend on the coal industry, from mining equipment manufacturers to chemical processing companies, are obviously feeling that pinch as well.

Lumber - I really don't know how much lumber comes out of Appalachia any more, though if I had to guess, it's probably on par with what you see coming out of the Pacific Northwest and Canada so it's probably doing pretty well right now.

Steel - From what I understand, Asia becoming home to many modern world powers, such as China, Japan, South Korea, and India, has caused their demand for steel to go through the roof. The thing is, they're going to source their steel locally, mostly from China, because it's cheaper than having stuff shipped to them, which makes a lot of sense. This creates an abundance of steel though, causing global prices to drop, making it more difficult for smaller steel firms to compete. As a result, a lot of them have closed their doors, causing people to lose jobs.

I see. Any particular reason why these weird people gather where they do?

They have no skills, no family living elsewhere and have literally no place else to go. So they stay and watch their towns and lives rot away in drugs and alcoholism and Government handouts. I've driven through some of these areas and there is a permeating sorrow that oozes out of the people and towns in the area. Go to an inner city where you see kids on drugs being raised by single parents with no hope, no future, no jobs, buildings falling apart, communities rotting and nobody has the energy to fix the core problems. Now, imagine that same inner city but instead of black and Hispanic people you have hillbillies and beaten down white people. That is the extreme poverty of rural West Virginia and Kentucky, rural Arkansas and Central Ohio.

Some of these families have lived in the hills of Appalachia for eight generations. There is a sunk cost in just up and leaving that they will never get back and a paralyzing fear of what the outside world is like.

If I ever win the lottery I want to get groups of poor inner city people and poor rural Appalachians together and get them to compare their lives. Maybe that combined anger will force some changes to address these folks.