Author Archives: James A. Bacon

What Price Happiness?

San Luis Obispo. Who wouldn't be happy living here... if you could afford it?

San Luis Obispo. Who wouldn’t be happy living here… if you could afford it?

by James A. Bacon

After learning that Virginia cities report some of the highest levels of personal satisfaction in the country (see “Happy“), I have been thinking a lot about what creates happy communities. In the hope of gaining a better understanding, I recently finished reading Dan Buettner’s 2010 book, “Thrive: Finding Happiness the Blue Zones Way,” that plumbed the social, economic and political wellsprings of happiness around the world.

The premise was intriguing: Buettner visited four “blue zones,” locations where research indicated inhabitants were world leaders in happiness. Visiting these zones — Denmark; Singapore; Monterey, Mexico; and San Luis Obispo, California — he interviewed politicians, academics, civic leaders and everyday people about why they thought their country/city measured off the charts.

The book is an easy and thought-provoking read. Buettner asks intriguing questions. Unfortunately, the answers to those questions are all across the board. While there are some universal constants — people are happier when they aren’t starving, dying from pestilence and in continual fear of their physical safety; people value family and friendships; people with a sense of purpose are happier than those without – different cultures define happiness in different ways. The things that make Danes happy often are very different from the things that make Mexicans happy. Transplant a Mexican family from Monterey to Copenhagen and the result will not be joy and contentment.

While the United States doesn’t set the standard for worldwide happiness, its inhabitants are happier than most. And of all the places in the country, it turns out that the residents of San Luis Obispo are, on average, the happiest in the United States. The picture that Buettner paints of San Luis Obispo, a city of 45,000 amid a county of 270,000, is an attractive one. Set in central California, the region has a great climate. There are lots of bike trails. The town is highly walkable. Local ordinances ban gaudy commercial signage. People are healthy and physically active. As home to California Polytechnic, the town has a lively cultural scene. People are tolerant of cultural minorities. Much wine is consumed. In sum, San Luis Obispo is the Charlottesville of California. Not coincidentally, Charlottesville was ranked happiest among all of America’s small metros in a 2010 Center for Disease Control survey cited in a July National Bureau of Economic Research paper, “Unhappy Cities.” (I do not know if the CDC used the same methodology for ascertaining happiness as the researchers cited by Buettner.)

There may be more to San Luis Obispo’s secret sauce than meets the eye, however. Outside the university, there are limited economic opportunities, Buettner writes. And the quality of life is so desirable that people drive up the price of the limited supply of housing to levels that are unaffordable to many.

In other words, San Luis Obispo has used strict zoning and growth controls to create a delightful environment… for those who can afford it. Judging by happiness surveys, the people who live there are extremely satisfied with the results. But think about what that means. There are thousands, maybe tens of thousands, of less affluent Californians who would like to share in that happiness but have been effectively priced out of the market. Who are those Californians? For the most part they are poor and minorities. San Luis Obispo is 85% white. Hispanics, some of whom are classified as white, constitute only 14.7% of the population. The number of Asians and native Indians is small, and the number of African-Americans is insignificant.

So, while San Luis Obispo celebrates diversity, it does not practice it. People — liberals and conservatives alike – like living around other people like them. The shared values stemming from such cultural homogeneity builds trust, and trust is a critical ingredient for happiness. The wider the radius of trust and cooperation in a community, the happier the people living there.

San Luis Obispo is hardly the only community to engage in exclusionary zoning. The practice is widespread around the country. But zoning out poor people, who tend to be less happy, is not in accord with America’s ideas of social justice. There is a rising tide of thought that nations should measure themselves not just by the size of their economies but by their Gross National Happiness. That sounds like a wonderful idea — until you ask whose happiness and how it is achieved.

Surprise — People Who Live in the Burbs Like Living There

Suburban living -- people seem to like it.

Suburban living — people seem to like it.

Americans living in the suburbs are more satisfied with their communities overall than their counterparts in urban or rural areas, finds the new Atlantic Media/Siemens State of the City Poll. Eighty-four percent of suburban residents rated their communities excellent or good, compared to 75% of urban dwellers and 78% of rural residents.

That finding seems all the more significant given the strong pro-urban bias of Atlantic Media, which publishes the Atlantic CityLab. A major theme of CityLab is how city centers and downtowns are undergoing a renaissance, reflecting a profound shift in American preferences for urban living over suburban living. It cannot have been easy for CityLab to conclude, “When it comes to overall community satisfaction, the suburbs are still king.”

But a closer examination of the data shows that conclusion to be almost meaningless — and that’s before considering the methodological issues related to divvying up the country into “urban,” “suburban” and “rural.” (CityLab acknowledges that some “suburban” areas are hard to distinguish from “urban” and others hard to distinguish from “rural.”) The poll results released yesterday don’t tell us what it is about “suburban” versus “urban” that people like or dislike.

Urbanism advocates generally argue that the preference for the urban way of life resides in its human settlement patterns — more compact development, walkable streets, transportation options and availability of amenities not found elsewhere. I would argue that those urban advantages were overwhelmed by unrelated issues such as inner-city poverty, crime, troubled schools and higher taxes, which drove whites and middle-class blacks into the suburbs. Any analysis needs to distinguish between the human environment and the built environment.

According to the Atlantic Media/Siemens data, white people, college-educated people, homeowners, older people, people with higher incomes — all categories with a high degree of overlap — tend to be happier with their communities than non-whites, less-than-college educated, younger, lower-income Americans. What a surprise. People with greater financial resources gravitate to the more desirable neighborhoods and are happier as a result. Who would have thunk it?

In coming weeks, CityLab will explore its findings relating to crime and policing, transportation, education, housing, energy and infrastructure. I expect those findings will be more revealing.

– JAB

Overruns, Subsidies and Pollution

Tide Light Rail in downtown Norfolk. Photo credit: Hamptonroads.com

Tide Light Rail in downtown Norfolk. Photo credit: Hamptonroads.com

by James A. Bacon

Randal O’Toole, the Cato Institute’s transportation scholar, has penned a devastating take-down of Norfolk’s light rail system, the Tide. The rail line, which opened in 2011 60% over budget and 16 months late, ran operating losses of $12.5 million in 2012, about double projections. Farebox revenues covered about 5% of operating costs. Hoped-for redevelopment around the Tide’s eleven stations has yet to materialize. (The post is supposed to appear on O’Toole’s blog, The Antiplanner, but I could not find it there. I am relying upon an email version.)

Now, says O’Toole, the editorial writers at the Virginian-Pilot want to compound the folly by slashing fares from $1.50 per trip (before discounts), among the lowest in the nation, to $.50 in a desperate bid to jolt ridership and stimulate economic development. The problem with that idea, he says, is that it cannot generate sufficient ridership to encourage developers to build around the train stops. The idea would expand the operating deficit while doing nothing to build the property tax base.

Ironically, light rail, much beloved by environmentalists for taking CO2-emitting cars off the road, is more energy-intensive at low levels of ridership than automobiles. Writes O’Toole: “Norfolk’s rail line uses far more energy than cars: 5,400 BTUs per passenger mile in 2012 compared with an average of less than 3,400 for cars and 4,100 for light trucks (and 3,7000 for Hampton Roads buses).”

O’Toole continues:

Rail transit is supposed to be about bringing large numbers of people into major job centers. But there are no major job centers in the region, or at least none served by the Tide rail line: Norfolk has only about 24,000 downtown jobs, less than 3 percent of the metropolitan area. Transit subsidies are also supposed to help low-income people who don’t have cars reach jobs, but the 2012 American Community Survey found that only 2.6 percent of workers in the Norfolk-Virginia Beach urban area lack cars, and half of them travel to work by car, while only 32 percent ride transit.

In fairness to the Tide, the rail line’s financial performance has improved since 2012. A mid-2014 review indicated that farebox recovery had increased to 17.7% and the operating cost had declined to $3.4 million (or $6.8 million annualized).

Still, even the updated numbers call into question the wisdom of extending the line to the Virginia Beach resort district, a project that could cost more than $1 billion. Does Virginia Beach really want to spend hundreds of millions of its own money (the state and feds would pick up much of the tab) for the privilege of creating a permanent subsidy and tax drain at a time when Americans are driving less and congestion is easing?

Bacon’s bottom line: Mass transit is a great idea… when it works. But the fact that heavy rail has done wonders in New York City and the core Washington metropolitan area does not mean that light rail will have a similarly transformative effect in a sprawling, low-density metro like Norfolk-Virginia Beach. You can’t force-feed mass transit. Commuter rail requires high-density, mixed-use pedestrian friendly development around rail stations. That land use pattern does not exist in Norfolk/Virginia Beach right now. It will take appropriate zoning, years of re-development and public investment in creating walkable streets before there is any chance of generating sufficient ridership to justify the investment.

There is a logical progression for mass transit: Serve a transportation corridor with scheduled bus service and support it with higher-density, mixed-use rezoning. If and when sufficient redevelopment occurs along the corridor to support it, upgrade the service to Bus Rapid Transit. If and when sufficient redevelopment occurs to support another phase transition, upgrade the route to rail. That process could well take decades, too long a time to satisfy impatient environmentalists who want to save the world now. But it would be fiscally sustainable in an era in which Virginia local governments are increasingly hard-pressed to meet their obligations.

Meanwhile, the Uber-Lyft revolution continues to roil the transportation industry. Using smart phones to connect drivers with riders and writing algorithms that optimize the distribution of fleet vehicles serving different price points and demographics (Cadillacs for rich riders, vans for poor riders) could render much of our transportation infrastructure obsolete. I’m still waiting for a politician who says it’s time to prioritize ride-sharing over mega-road and transit projects. Surely, there’s someone out there!

A Surprising Source of Resilience in SW, Southside Virginia

start-upsBack on the subject of entrepreneurship and business start-ups in Virginia… The Virginia Performs website provides a useful overview of data that describes the climate for business growth in the state. With the caveat that the data is subject to reporting lags, hence a little of out date, the picture is a modestly favorable one. The Old Dominion excels in the percentage of technology firms and the percentage of fast-growth firms, and fares in line with national averages for patents per capita, venture capital, business start-ups and university spin-offs.

Perhaps the most surprising finding emerges from the regional breakdown of business start-ups per 10,000 population broken down by region, as seen in the chart above. After years of lagging statewide averages, Southside Virginia has come on strong in recent years, surpassing even Northern Virginia in 2012. Southwest Virginia has out-performed the state average in several recent years, although it dipped in 2012.

With the perception of “Virginiagal2,” who has been touting the entrepreneurial potential for areas outside Virginia’s urban crescent in the comments section of this blog, not many observers would have predicted this trend. Of course, one must be careful with the data. We don’t know, for instance, what proportion of these new businesses are comprised of home-based businesses and micro-businesses with limited growth prospects, and what number might have fast-growth potential. Regardless, the rate of business formation suggests a hidden resilience in the Southside and Southwest Virginia economies that may keep those regions economically afloat in the face of labor-market economies that favor the major metros.

– JAB

Bringing out the Knives

An Afghan pesh-kabz

An Afghan pesh-kabz

by James A. Bacon

There is a rising tide in the op-ed pages, TV commentary and blog commentary that former Governor Bob McDonnell is a brutish, swinish cad for portraying his wife Maureen as the heavy in the corruption trial. You’ve got to love liberals. They’re so very compassionate…  until they’re talking about their wounded enemies. Then, like the Afghan women in the Rudyard Kipling poem, “The Young British Soldier,” they scour the battlefield to “cut up what remains.”

If Maureen and Bob McDonnell had been Democrats instead of Republicans, we would be treated to a litany of perspectives on the heavy toll of political life upon the marriages of elected officials, the unambiguous signs that Maureen was suffering from depression, and speculation from mental health experts to provide subtlety, nuance and context to the story.

No such compassion is accorded McDonnell, who now is being depicted as a man who “betrayed” his wife and was willing to “flay” her character in order to save himself, just to cite the observations of Petula Dvorak and her headline writer in the Washington Post. (Bacon’s Rebellion‘s very own Peter Galuszka is no kinder.)

Here’s the question I would pose to them. If you were in McDonnell’s shoes, and if the marriage were the shambles he says it was, and if Maureen was indeed the one who solicited the gifts and loans from former Star Scientific CEO Jonnie Williams, Sr., and if you truly believed yourself to be innocent of any illegality, what would you have done? Would you have, in Dvorak’s words, “manned up” and taken the plea agreement offered by prosecutors before the trial? How many people would admit to a crime they believed they did not commit?

Who really bears the moral onus here? McDonnell, for defending himself, or the prosecutors, who (a) proceeded with a case that’s looking flimsier by the day, and (b) called the witnesses whose testimony trashed Maureen’s reputation before McDonnell breathed a word?

McDonnell bears his share of blame for the failing marriage, as he seemed willing to concede on the witness stand yesterday. Maureen was happy living in Virginia Beach before he rose to statewide political prominence. He asked her to sacrifice a lot for his political career, giving up her cozy network of friends and her part-time job selling vitamin supplements. When he first moved to Richmond, the family lived apart while the kids finished high school. As attorney general and especially as governor, he traveled constantly and spent half his nights away from his wife and family. He insisted she use a small inheritance to pay down credit card bills. When Maureen expressed her increasing unhappiness by nagging and throwing tantrums, he withdrew from her, often spending extra time at the office. Emotionally exhausted from the confrontations, he did not question some of Maureen’s activities that he should have questioned — it was easier just to look the other way.

But McDonnells’ critics don’t mention any of these all-to-human failings that probably could describe thousands, even millions, of American men at some point in their marriages. Liberals bring out the long knives. They move in for the kill, portraying their weakened foes as morally reprehensible, as less than human.

In his poem, Kipling advised the wounded English soldier, “Jest roll to your rifle and blow out your brains.” McDonnell did not roll over. Perhaps that was his worst affront of all.

Virginia’s Entrepreneurial Vitality

inc5000

How does Virginia reinvigorate a lagging economy dragged down by sequestration-driven cuts to defense spending? Foster a business environment conducive to new business formation.

There’s a good-news, bad-news story coming out of publication of the 2014 Inc. 5000 compilation of the nation’s fastest-growing companies. As Virginia Business reports, the 284 Virginia companies on the list ranked Virginia 5th in the country, lagging only California, Texas, New York and Florida, states with far larger populations and business communities. That’s a positive indicator of Virginia’s business vitality.

It’s a mixed-news story, however, because three-quarters of the fast-growing companies are located in Northern Virginia. While NoVa is an incredibly fertile ground for entrepreneurship, RoVa (the rest of Virginia) is not. Take away Northern Virginia, and what you get is… middle America.

Many (including me) have questioned the ability of the NoVa business community, which is heavily skewed to defense contracting work, to restructure itself to thrive in an era of federal budget cuts. I’m less worried now than iI once was. Ironically, budget cuts may benefit the region in the long run. With one of the best educated, highly skilled populations anywhere in the country, NoVa residents have no lack of ideas for new enterprises. The contraction of the government-contractor sector releases employees, office space and other resources  to start-up companies. While NoVa is suffering now, the number of fast-growth firms suggests that the region will recover and within a few years resume its position as Virginia’s economic growth leader.

Charlottesville looks like a mini growth story but the metropolitan region is too small to have much spillover effect for the statewide economy. Hampton Roads and Richmond appear to host small, fast-growth companies roughly in line with national averages — a lukewarm performance.  Virginia’s smaller metros and rural areas are laggards, as are small metros and rural areas are across the country. (I’m on vacation and haven’t had time to calculate the number of fast growth companies per capita, so these impressions are rough and subject to revision.)

– JAB

McDonnell on the Stand

mcdonnellFormer Governor Bob McDonnell took the stand yesterday, defending his conduct in connection with Jonnie Williams Sr. and Star Scientific in precisely the way one would expect: Other than providing access to government, something that every governor does, he said, he did Williams no favors. As the Times-Dispatch summarized his testimony, “He never used discretionary funds at his disposal to give Star Scientific a grant, never paid a site visit to the company, and never held a news conference or issued a news release for the company.”

The fact that people are disgusted with the influence of money in politics is not an argument for convicting McDonnell. If McDonnell can be sent to jail for arranging meetings between Williams and state officials, then every living governor in Virginia had better start taking measurements for their orange prison jump suits. As for failing to disclose the real estate loans from Williams in loan applications to a bank and a credit union, the defense has made the case that he wasn’t required to — and the prosecution hasn’t presented a shred of evidence to suggest otherwise.

The only thing that can change the course of this trial is an aggressive cross-examination by the prosecution. If McDonnell comes across as contradictory or evasive, he could raise doubts that don’t exist now. But at this point, it does not appear that federal prosecutors have a case.

– JAB

Mo Maureen and Po’ Maureen

Mo McDonnell

Mo McDonnell

by James A. Bacon

More interesting testimony from the McDonnell trial yesterday. In the balance, the defense bolstered its case. But it was not entirely convincing.

The other Maureen. Mo McDonnell, Bob McDonnell’s little sister, was a successful business executive who had worked for IBM, Regent University and Amerigroup, culminating with a salary of $540,000 in 2012 and accumulating savings of more than $1 million. Mo testified that she had more than enough money to cover the cost of maintaining the troubled MoBo Real Estate Partnership, undercutting the prosecution’s argument that Bob borrowed money from Star Scientific CEO Jonnie Williams out of desperation to keep the real estate partnership afloat. Indeed, when her bother decided to repay the loans to Williams, she was the one who fronted him the money to do so.

Although she could have covered any shortfall herself with a $150,000 payment she received when she left Amerigroup, she explained, she and Bob decided that interest rates were so low that it made more sense to borrow the money so she could invest her own funds at a higher rate of return.

Really? I’m not sure that passes the smell test. She is asking jurors to believe that it made more sense to borrow money from Jonnie Williams, even though Bob knew how it would look if the loan were made public and even though he had discussed with Williams (if we are to believe Williams) ways to avoid disclosure. Any reasonable person would conclude the exact opposite, that it made far more sense for Bob to borrow the money from his sister in a transaction that would have created no questions — as he ultimately did when he repaid Williams. If I were the prosecution, I would hammer that hard. It is not a convincing explanation. My hunch: There is more to the story, and we haven’t heard it yet.

Poor Maureen. Mo McDonnell and Kathleen Scott, a special assistant to the governor’s wife, provide new details on the first lady’s state of mind. The story of Po’ Maureen’s out-of-control behavior has been so consistent throughout the trail that there is little point in enumerating all the anecdotes here. But one round of testimony advances us to a new level of understanding.

Although McDonnell defended his wife to others, he acknowledged that she had a problem.  As Mo testified (as reported by the Virginian-Pilot):

The first lady once reduced her to tears with a biting comment during a weekend family gathering in 2012, McDonnell’s sister testified. She told her husband she wanted to leave.

“Bob came up and apologized and begged me to stay,” she said. “He said he was working on it. He was trying to get her help.”

As I have observed in previous posts, it is obvious that Po’ Maureen was suffering from depression, mood swings, hysterical outbursts and other signs of mental illness. This testimony confirms that while Bob coped by withdrawing and tuning her out, he also recognized she had a problem. I would not be surprised if testimony reveals that she sought psychiatric treatment and at some point took medication.  The McDonnells may not choose to release this information because they consider it private and shameful. They should not. Millions of Americans suffer from depression and related disorders. Suffering from depression is not a moral failing. (The behavior resulting from depression can be but the depression itself is not.)

Acknowledging Maureen’s mental illness would not excuse illegal or unethical conduct, especially on Bob’s part, but it would would put the McDonnells in a different light than the prosecution’s explanation, that Bob joined in a calculatingly immoral conspiracy with his wife to commit fraud. Also, the Maureen-the-depressed-wife seems less harsh and demeaning than the Maureen-the-bitch defense.

Throwing Maureen under the Bus

maureen_mcdonnellby James A. Bacon

The full dimensions of the McDonnell family tragedy came into clearer focus yesterday as attorneys representing Maureen and Bob McDonnell launched the defense phase of the corruption trial… by throwing Maureen under the bus. Defense witness Janet Kelly, Secretary of the Commonwealth in the McDonnell administration, described as “diva-ish” and so difficult with work under that her staff threatened to quit en mass.

Maureen’s behavior was so out of control that those in the governor’s inner circle wonder if she suffered from a mental illness. The picture painted by Kelly was of a woman who was isolated, miserable and unable to grow into the job. Kelly’s relationship with Maureen had deteriorated to the point she could not work with her even before Bob took office, but she did evince some sympathy for the first lady. Breaking down in tears at one point, she said she did not want to “pile on.” As the Washington Post summarized her testimony:

Maureen McDonnell repeatedly told her that being first lady was not something she had wanted. She was uncomfortable with public speaking and, in her first year in the mansion, lost both her parents and sent her youngest children to college — all while essentially losing her husband to his job.

“She would say, ‘I didn’t sign up for this. This isn’t what I wanted,’ ” Kelly testified. “It was a lot for her.”

Perhaps most germane to our understanding of the relationship between the former governor and his wife — defense attorneys said the marriage was in such bad shape that the two could not have conspired to swap gifts for favors with Star Scientific CEO Jonnie Wiliams Sr. — Kelly testified that the displays of affection in public between Bob and Maureen hid a deeper alienation. In private settings, she would rage at him.

Bacon’s bottom line: More pieces are falling into place. Bob McDonnell was an ambitious man. What he wanted out of life — political fame and success — wasn’t what Maureen wanted. Family finances were a mess before the family entered the governor’s mansion, made worse by extensive borrowing during the gubernatorial campaign. Maureen was ill equipped to fill the role of first lady; she didn’t ask for the job but she was stuck with it. Unable to handle the stress of the position on top of the deteriorating family finances, she flew into rages, alienated many of the people around her, including her husband, which made her situation even worse. She gravitated to Williams, who plied her with attention, gifts and what seemed to be friendship. (Kelly’s testimony supports my observation in a previous post that her behavior seemed indicative of clinical depression, a phenomenon that takes on a life of its own.) It’s a sad story, even a tragic one.

None of this excuses breaking the law (if laws are shown to be broken). None of it exonerates the McDonnells for showing terrible judgment by accepting gifts from Williams. Wrong is wrong, whatever the psychological explanation. But it does provide a context for understanding and interpreting what happened. And the picture we’re getting is of a vulnerable woman preyed upon by Williams to extract political favors from the administration.

“The Economy of the Past Is Over.” But What Comes Next?

McAuliffeby James A. Bacon

So, Virginia faces a $2.4 billion projected budget shortfall, which Governor Terry McAuliffe blames largely on defense funding cuts mandated by sequestration. Surprise, surprise. We’ve seen this train wreck coming for years. Some (including multiple writers on this blog) have seen it more clearly and shouted about it more loudly than others. Now it’s here — the slowing economic growth, the stalled budget revenues and the general malaise. The question is, what do we do about it?

McAuliffe is making the right noises. As the Washington Post reports, the governor said the state needs to make a fundamental shift away from its reliance on federal spending. “It is obvious that the economy of the past — where we could simply take the economic benefits of the Department of Defense for granted — is over,” he said. “We need to move past this reliance — and build a new entrepreneurial, innovative and dynamic economy.”

Vague and platitudinous as the statement is, it has the virtue of being true. The hard part is figuring out how to move to that new entrepreneurial, innovative and dynamic economy. Part of the answer is not doing the same thing we’ve done before, only more of it.

McAuliffe can make a lasting mark on Virginia if he avoids that trap. But it will be difficult. When he solicits advice, whether in private conversations or through public mechanisms like study commissions, he’ll hear from the established special interests — not from startup entrepreneurs who are too busy building their businesses to participate in the public policy process. He’ll hear from the economic development lobby that we need to spend more money on corporate recruitment. He’ll hear from the convention & visitors lobby that we need to spend more money promoting tourism. He’ll hear from the agriculture lobby that we’ll need to spend more money on overseas trade missions. He’ll hear from incubators that we need to spend more money on incubators. He’ll hear from the public universities we need to spend more money on university R&D. He’ll hear from the chambers of commerce that government, not business, needs to spend more money on workforce development to give Virginians the skills they need in the marketplace.  McAuliffe will touch bases with all the stakeholders and he’ll hear the same thing they’ve been telling state government for decades: Give us more money!

In the early 2000s, back when I started Bacon’s Rebellion,  Governor Mark Warner initiated the state’s first economic development strategic plan. Before running for governor, Warner, a successful technology entrepreneur and venture capitalist, had traveled the state meeting with local business communities and setting up local venture funds. From first-hand experience, he understood the nexus between technology and entrepreneurial innovation. He appointed a highly capable attorney, Michael Schewel, as commerce secretary to oversee the study.

Schewel sought out new thinking, including the work, which was novel at the time, of economic geographer Richard Florida’s on the central role of the creative class. The final product of the study group included some interesting small-bore initiatives, strengthened business-university ties and represented genuine progress over previous thinking. But it conceptualized economic development along the lines of Virginia’s existing administrative organization and reflected the established institutional thinking of the “stakeholders.” Nothing really changed. If Warner and Schewel couldn’t push Virginia economic development into a fundamentally new direction, I fear, no one can. At least they tried. No one since then has made an effort to buck the conventional wisdom.

The most important thing we can do, as I blogged yesterday, is to think how to stimulate new business formation — especially of companies with high growth potential. We need more companies like Washington, D.C.-based SmartThings, an Internet-of-Things start-up which earlier this month sold out to Samsung for $200 million. SmartThings got its start literally two or three years ago with a Kickstarter fund raiser and $15 million in venture funding. That’s the kind of wealth creation we should be looking for.

One strategy would be to cull unnecessary regulation. Contrary to the views of some who frequent this blog, the state regulates many aspects of the economy to the detriment of innovation. Uber, Lyft and the taxicab sector is but one example of many that could be mentioned. Given time, I will detail others. But that is only a partial and incomplete solution. Perhaps more fundamentally, we need to build the kinds of communities where members of the creative class want to live. We need to recognize that economic development equals community development (smart growth). We also can work harder to help government do better those things that only government can do (smart cities).

The traditional pillars of economic development — industrial recruitment, tourism, agriculture — all have valuable contributions to make. But they are not sufficient by themselves to drive the economy forward. It is time for a stem-to-stern rethinking of how to move Virginia to the next level. If the budget crisis prompts that re-evaluation, it may prove more a blessing than a curse.