This was the first single from Mellencamp's ninth album, The Lonesome Jubilee. Like many songs on the album, it deals with social inequality and the disparity of wealth in America. The "paper in fire" represents the dreams that disappear when Americans are hit with the harsh realities that destroy them.
Considering how successful he had become, you might think Mellencamp would be more optimistic, but he always connected with the working class and never fell for the trappings of fame. Another factor is that a lot was going wrong for Mellencamp: his uncle and grandfather had recently died, and many of his friends were getting divorced. "It's horrible to think you've gotta be a miserable son of a bitch to write a good song," he said at the time, "but I guess that's kind of the way it works sometimes."
The video was shot outside of a house on a dirt road in Savannah, Georgia. Mellencamp wanted to show poverty in America to go along with the social commentary in the song, and also explore racism - the extras in the video are black. His next video - for "Hard Times For An Honest Man" - was also shot in Savannah.
The Lonesome Jubilee was an ambitious album with songs that spanned a variety of genres. "Paper in Fire" incorporated an Appalachian sound, with a prominent fiddle (played by Lisa Germano) and accordion (played by John Cascella).
Much of the album was conceived by Mellencamp and his band while they were on his Scarecrow tour, which gave them a lot of time to hone their ideas. Mellencamp was very happy with the sound of the album, and has pointed out that the Appalachian vibe on this track was soon became a trend in popular music.
The line, "We keep no check on our appetites," is cribbed from the 1963 movie Hud, starring Paul Newman. The line is said by Melvyn Douglas' character: "You don't respect nothing. You keep no check on your appetites at all. You live just for yourself."
Mellencamp liked the movie so much, he named one of his sons Hud.