Second in an occasional series on Minnesota mining.

Maybe we've been wrong all along about the abundant deposits of iron ore in northeastern Minnesota, enabling generations of Minnesotans to earn a good living by mining.

That great natural resource might not be a blessing after all. More like a curse.

It's not a stretch to call it that, because all of that iron ore wealth just didn't turn out to be the building block of a thriving and sustainable regional economy.

About 8 percent of workers in the area served by the Iron Range Resources and Rehabilitation Board still work in mining when the mines are fully operating, so it's still the economic engine.

What's striking about the jobs data in the excellent recent report by the Office of the Legislative Auditor is that there's no other significant collection of private employers that pay really well besides those taconite mining operations.

One out of five jobs in the area was in health care or social assistance, a higher proportion than in the state as a whole. The Iron Range had relatively more people working in public administration, too, although there could be lots of reasons other than the featherbedding of taxpayer-funded payrolls.

Among private employers, a higher percentage there work in retail trade or hospitality and food service. In fact nearly a quarter of all jobs on the Iron Range are in these fields, jobs known for part-time schedules and relatively low pay.

Among the job categories underrepresented on the Iron Range is manufacturing, with maybe about half as many people in those jobs compared with the state as a whole. And it's a category in sharp decline on the Iron Range, at least in the 15-year period through 2014. The only job category that performed even worse was management.

So now that iron mining is once again in a terrible slump — this one driven by a global glut of steel and iron ore — you can understand why policymakers in the state are urgently talking about more economic diversification.

Unfortunately, that's not exactly a new idea — on the Iron Range or anywhere else that is dependent on one big "extraction" industry.

How a big gift of natural resources like an oil field or the Mesabi Iron Range turns out to be of little long-term economic value has intrigued economists going back at least to the 1950s.

They have since come up with lots of examples, pointing out it's more likely that a vibrant economy gets going in a place that wasn't blessed with any natural resources at all. They called this problem the resource curse.

A close cousin is called the "Dutch Disease," getting its name from what happened to the Dutch economy after a big natural gas discovery in 1959. Much to the surprise of Dutch government officials, the following boom of natural gas exports didn't make the country richer. Instead, what they got was an economic crisis.

The real curiosity is why abundant natural resources turn out to be a curse, because common sense would suggest that having at least one solid industry paying a lot of good wages should provide a head start to a thriving economy.

British economist Richard Auty first called it the resource curse in a 1993 book, and the studies that followed usually focused on a country, not a region. One explanation economists came up with for what happened is that these resource-rich countries seemed to end up with incompetents or crooks in charge of the government.

Instead of public officials looking out for the taxpayers and setting the stage for economic growth, they looked to the one local industry that seemed to have a lot of money and spent their time trying to get their hands on some more of it.

The corruption didn't have to mean embezzlement or kickbacks. It might have just meant taxing some of the mineral or oil wealth and steering the tax money to the politicians' pet projects of questionable value or the schemes of their cronies. After all, the money's coming from the mines or oil fields. It wasn't the people's money.

Another observation is that the mine and oil-field owners were usually a long way away, whether it's U.S. oil companies operating in Africa or the mining companies here in the state being run out of Cleveland or Pittsburgh.

When the check was mailed for payment of a boatload of iron ore, it sure didn't go to someone living where a big open pit mine starts on the edge of town. Neither did the profits. The people working in the mines might have been getting paid well, but they're not the ones accumulating wealth that could have been put into other businesses.

The last explanation that seems to make a lot of sense is the idea that one big extraction industry crowds out other kinds of employers. One of the ways this works is that the best and brightest kids come of age and then go to work in the mines or oil fields, maybe working alongside their parents and uncles.

These jobs pay very well and have the best prospects for years of steady employment. There's no reason to take a job working for some local start-up company that might dry up and blow away in a few years.

The same sort of thinking discourages a person who might be tempted to try starting a company of his or her own, which is both a lot of work and risky when a job in the mines looks like a path to a far more secure retirement.

How many of these things were a factor in what happened in northeastern Minnesota over the decades? It's very difficult to say, but as an explanation it sure beats blaming the hardworking people of northeastern Minnesota for not having figured out how to create a broadly diversified economy.

There are strategies that governments have tried to defeat the resource curse, including collecting some of the mining wealth and investing it into growth industries. Yet the overall record doesn't seem that encouraging.

As a Bloomberg writer once put it, "all told, local populations can be left with little to show for their resources except a degraded environment."

That sure doesn't sound like a blessing.

lee.schafer@startribune.com • 612-673-4302