Category Archives: Economic development

McAuliffe Dodges Mandatory Renewable Energy

coal plant burnsBy Peter Galuszka

It seems like two steps forward and one step back. That’s about the best I can come up with for Governor Terry McAuliffe’s new energy plan for Virginia.

On the two steps forward side, McAuliffe is pushing for more wind power and relaxing regulations to make it easier to back solar, such as allowing towns to create their own solar panel farms near their city limits.

The one step back is the usual commitment to energy sources of days before, such as a nuclear, offshore drilling for oil, coal and natural gas. That’s what former Governo Bob McDonnell wanted with his pipe dream of making Virginia “The Energy Capital of the East Coast.”

The biggest problem with the McAuliffe plan is that it dodges the issue of making Virginia’s Renewable Portfolio Standards (RPS) mandatory. I asked Brian Coy, his press spokesman about this, and he said that the governor sees that as something for the future.

Maybe better late than never, but the fact that Virginia has always bowed to the power of Big Energy and declined to make mandatory the conversion of a certain amount of electricity generation to renewable sources such as wind, solar, geothermal and hydroelectric.

Plain and simple, that is why Virginia gets an embarrassingly low six percent of its power from renewables and is far behind states like Maryland and North Carolina that have mandatory standards. One wonders why Virginia seems so exceptional. The only answer that I can come up with is that Old Energy firms such as utility Dominion and coal baron Alpha Natural Resources are huge contributors to political candidates of both stripes.

Dominion praised the governor’s efforts and the Sierra Club had lukewarm approval.

The problem with shifting to renewables is that not making it mandatory by law gives Big Fossil and Nuclear an immediate price advantage. Coal is deadly, messy and is a major contributor to climate change. A few years ago, there might have been a greater push towards wind and solar to replace it. But hydraulic fracking came along, bringing a big boost to natural gas from hard-to-reach geologic formations.

Thus, gas pushed out coal (although conservative Big Fossil types claim it is Barack Obama’s over-regulation but that just ain’t so) on economic terms. It has probably delayed advanced nuclear technology and most certainly has delayed solar and wind. They are expensive now but won’t be in the future, so fracked gas’s great advantages won’t last forever.

Don’t believe me? Check out historical data on gas prices.

McAuliffe, meanwhile, is pushing such dubious projects as a 550-mile-long gas pipeline running over the tops of pristine and sensitive mountaintops and through lots of small towns that don’t have big corporate clout to change pipeline routes.

One more step back.

Support Your Local Goat Herder

Goats at work. Photo credit: Goat Busters

Goats at work. Photo credit: Goat Busters

by James A. Bacon

A common reed plant, known by the scientific name of Phragmites australis, introduced into the United States in the 18th century from Europe, has invaded the eastern marshes of North America. Like many invasive species, Phragmites out-competes native marsh plants. When the reed establishes expansive mono-cultures, plant diversity declines precipitously. And when plant diversity declines, so does the diversity of insects and the rest of the food chain dependent upon the plants.

Over the past five years, land managers and private organizations have treated more than 80,000 hectares of marsh with herbicides at a cost of $4.6 million per year to control Phragmites. Mowing and burning the plant hasn’t proven economical, given high labor costs. And insect control often does greater damage to native strains than to the invasive plant.

In desperation, the marine science and conservation division of Duke University tested a new technique for controlling the plant: grazing goats. At a fresh water marsh in Beltsville, Md., the scientists penned goats in enclosures where they had little but Phragmites to eat. While the goats didn’t eradicate the plant pest, they substantially reduced its biomass — from 94% of ground cover to 21% on average — allowing native species a better chance of competing, investigators concluded.

Across the country, government authorities are discovering the virtues of goats for clearing unwanted brush, even tending lawns. The hardy ruminants have an appetite for plants that other animals shun.

There is a small but active goat industry in Virginia. The Virginia State Dairy Goat Association lists 33 members. Jack & Anita Mauldin’s Boer Goats page lists 34 goat farms. My impression is that most goat products fall into the organic or artisanal agriculture category — goat meat, goat cheese, goat milk, maybe some goat wool. But perhaps the most interesting enterprise is Goat Busters, based in Afton, which specializes in land clearing. As its website says, “Goat Busters is quite simply the most environmentally sensitive method to clear land or control invasive species vegetation ever, short of going out and hand-pulling each and every little weed.”

Bacon’s bottom line: Virginia government, businesses and property owners need to Get Goat. They should more aggressively explore the use of goats as a tool for clearing brush and controlling invasive species. Transporting the goats and setting up the pens is more labor intensive than attacking a patch of brush or Phragmites with a Bush Hog or a tankful of herbicides, but goats don’t compact the soil and they don’t leave behind chemical compounds laden with heavy metals. They do leave behind fertilizer, enriching the soil.

In economic development parlance, substituting locally raised goats for imported herbicides and rotary mowers is called “import substitution.” The practice keeps money in the region, supporting local enterprises and jobs. It’s hard to imagine the goat industry transforming the face of Virginia agriculture, but every little bit helps make our rural counties more economically viable.

The Other SOL Scandal

Source: VDOE SOL Assessment Build-a-Table

Source: VDOE SOL Assessment Build-a-Table

by James A. Bacon

The new, tougher Standards of Learning (SOL) test scores have Virginia’s political establishment in an uproar. Too many children are failing to achieve basic proficiency. Dozens of schools seem institutionally incapable of improvement. Entire school divisions resemble learning-free zones.

The overwhelming focus of public attention has been on the disappointing pass rates for basic proficiency. In just the latest example, Governor Terry McAuliffe vowed yesterday that all schools in Richmond, Petersburg and Norfolk will reach full accreditation before he leaves office, the Times-Dispatch reports today.

While the failure of thousands of Virginia kids to meet basic proficiency standards is alarming, the failure of even more kids to achieve “advanced” (college-track in upper grades), learning standards is every bit as panic-inducing. But no one seems to be paying attention.

If students fail to achieve proficiency in reading, writing, history, math and science, they will not qualify for the vast majority of jobs opening up in the knowledge economy. The numbers suggest that as many as one-fifth of Virginia kids will be consigned to the economic margins.  Likewise, the inability to achieve advanced, college-path standards, suggests that only one out of five Virginia public school students will be prepared for college. Not shown in the table above: Advanced scores for math and science are even lower on average. Virginia students are really unprepared for the so-called STEM subjects required for mastery of technology.

Bacon’s bottom line: We’re not doing ourselves any favors by focusing overwhelmingly on bringing the bottom performers up. We need to improve performance across the board.

Tobacco Commission Needs Huge Makeover

tobacco leafBy Peter Galuszka

One more glaring example of mass corruption in Virginia is the grandly named Virginia Tobacco Indemnification and Community Revitalization Commission formed 14 years ago to dole out Virginia’s share of a $206 billion settlement among 45 other states with cigarette makers.

I’ve been writing for years about how millions of dollars are doled out with little oversight to economic development projects supposedly helpful to the former tobacco-growing parts of the state from the bright leaf belt around Dinwiddie out west to the burley leaf land of the mountains.

There have been no-strings giveaways to absentee tobacco quota holders, a board member sent to prison for siphoning off grant money and the shenanigans of the extended Kilgore family which is very politically powerful in those parts. The commission even figured in the McDonnell corruption trial starring the former and now convicted governor and back-slapping witnesses for the prosecution, entrepreneur and tobacco-believer Jonnie R. Williams Sr.

I revisit the issue in Sunday’s Washington Post and I ask the obvious question of why no one seems to watching the commission. I raise broader ones, too, such as why the commission  serves only people in the tobacco belt. That doesn’t seem fair since the Attorney General’s office represented all of the state in the 1998 Master Settlement Agreement against four major tobacco firms. People in Hampton Roads, Arlington, Onancock and Winchester should be benefit but get nothing from the settlement. They didn’t  because tobacco road legislators pulled a fast one back in 1999 when they set things up.

There needs to be a thorough disassembling of the commission’s current governance structure with many more people far from Tobacco Road included. There’s far too much family and friend back-scratching as it is. It is like watching a vintage episode of the Andy Griffith show but it really isn’t funny.

(Hat tip to James A. Bacon Jr. who spotted the commission as a great story back in the year 2000 when he was publisher of Virginia Business).

So, please read on.

Genius-Free Virginia

geniuses

by James A. Bacon

Economic development has become a game not just of recruiting corporate capital but of developing, recruiting and retaining human capital. Much has been written about the desirability of recruiting members of the “creative class,” the entrepreneurs, scientists, artists and educators who contribute disproportionately to entrepreneurship and economic growth. But how about the super creatives — the 1%, so to speak, of creativity? No one has tracked them…. until now.

The MacArthur Foundation has released data showing the origins and present whereabouts of 897 exceptionally creative individuals in the arts, sciences, humanities and public policy sphere recognized by the Foundation and bestowed with a no-strings-attached $625,000 stipend. The data show two things: (1) MacArthur geniuses are born disproportionately in California and the Northeastern U.S., and (2) they gravitate in huge numbers to California and, to a lesser extent, a sub-set of Northeastern states: New York, New Jersey and Massachusetts.

creativity_on_moveIt is discouraging to see that Virginia is arid ground for producing geniuses. We’ve fallen a long way since the days of the Founding Fathers! Only three MacArthur fellows were born in the state. The silver lining is that the state has enjoyed a net gain of 10 MacArthur fellows due to in-migration. We may not be producing geniuses but at least we’re attracting them. Still, the number residing here still is meager compared to many other states.

The MacArthur Foundation provided little analysis of what accounts for the birthing and migration of geniuses. Perhaps the paucity of super-creative people in Virginia and the South generally reflects a lower quality education system. One wonders, for example, if Virginia’s emphasis on Standards of Learning — elevating the academic performance of the entire student body to minimum standards, which puts the focus on weaker students — will do much of anything to elevate the number of super-achievers.

One also might ask what factors impel geniuses to move. They are far more likely (79%) to move from their state of birth than the general population (30%) or the college-educated population (40%). More than one-fifth of MacArthur geniuses came to the United States from abroad. Scientific geniuses migrate to centers of research excellence. Artistic geniuses migrate to cultural centers. Geniuses in the humanities migrate to communities with top universities. That explains the concentrations in California, New York and, to a lesser extent, Boston, and the exodus of geniuses from Pennsylvania, which creates geniuses aplenty but has trouble hanging onto them.

The handful of geniuses who live in Virginia, I suspect, are found mostly in Northern Virginia, in the orbit of Washington, D.C. Who knows, there may be one or two in Charlottesville. (If someone has the time, they can peruse the list of MacArthur fellows here to see where Virginia’s geniuses are located.) Among the MacArthur Foundation’s main areas of focus, one is “public issues.” Presumably, many of grantees in this field are located in Washington, D.C. (home to 32 geniuses) and the outlying regions of Maryland (15 geniuses) and Virginia (13 geniuses).

What hasn’t been demonstrated is whether the geography of geniuses impacts the economy. Richard Florida demonstrated a clear connection between the creative class and economic prosperity but no one yet has shown a connection between concentrations of MacArthur fellows and economic vitality. Perhaps that’s because no one has studied the issue.

There’s also one other possibility: Maybe the types of people recognized for creative genius reflect the values and worldview of the civic elite in Chicago, where the MacArthur Foundation is located. Are any of MacArthur’s fellows champions of traditional values, fiscal conservatism and free markets favored by the genius-free heartland? It’s worth a study.

The Huge Controversy Over Gas Pipelines

atlantic coast pipeline demonstratorsBy Peter Galuszka

Just a few years ago, Gov. Terry McAuliffe seemed to be a reasonable advocate of a healthy mix of energy sources. He boosted renewables and opposed offshore oil and gas drilling. He was suspicious of dangerous, dirty coal.

Then he started to change. During the campaign last year, he suddenly found offshore drilling OK, which got the green community worried. But there’s no doubt about his shifts with his wholehearted approval of the 550-mile Atlantic Coast Pipeline proposed by Duke Energy, Piedmont Natural Gas and AGL Resources, along with Richmond-based Dominion, one of McAuliffe’s biggest campaign donors.

The $5 billion Atlantic Coast Pipeline is part of a new phenomenon – bringing natural gas from the booming Marcellus Shale fields of Pennsylvania, Ohio and northern West Virginia towards busy utility markets in the Upper South states of Virginia, North Carolina and parts ones even farther south. Utilities like gas because it is cheap, easy to use, releases about half the carbon dioxide as coal, which is notorious for labor fatalities, disease, injuries and global warming.

The Atlantic Coast Pipeline would originate at Clarksburg, W.Va. (one of my home towns) and shoot southeast over the Appalachians, reaching heights of 4,000 feet among rare mountain plants in the George Washington National Forest, and then scoot through Nelson, Buckingham Nottoway Counties to North Carolina. At the border, one leg would move east to Portsmouth and the Tidewater port complex perhaps for export (although no one has mentioned that yet). The main line would then jog into Carolina roughly following the path of Interstate 95.

It’s not the only pipeline McAuliffe likes. An even newer proposal is the Mountain Valley Pipeline that would originate in southern West Virginia and move south of Roanoke to Chatham County. It also faces strong local opposition.

atlantic_coast_pipeline mapThe proposals have blindsided many in the environmental community who have shifted some of their efforts from opposing coal and mountaintop removal to going after hydraulic fracking which uses chemicals under high pressure and horizontal drilling to get previously inaccessible gas from shale formations. The Marcellus formation in Pennsylvania, New York, Ohio and West Virginia, the birthplace of the American oil and gas industry, has been a treasure trove of new gas.

The fracked gas boom has been a huge benefit to the U.S. economy. It is making the country energy independent and has jump started older industries in steel, pipe making and the like. By replacing coal, it is making coal’s contribution to the national energy mix drop from about 50 percent to less than 40 percent and is cutting carbon dioxide emissions that help make for climate change.

That at least, is what the industry proponents will tell you and much of it is accurate. But there are big problems with natural gas (I’ll get to the pipelines later). Here’s Bill McKibben, a Middlebury College professor and nationally known environmentalist writing in Mother Jones:

Methane—CH4—is a rarer gas, but it’s even more effective at trapping heat. And methane is another word for natural gas. So: When you frack, some of that gas leaks out into the atmosphere. If enough of it leaks out before you can get it to a power plant and burn it, then it’s no better, in climate terms, than burning coal. If enough of it leaks, America’s substitution of gas for coal is in fact not slowing global warming.

Howarth’s (He is a biogeochemist) question, then, was: How much methane does escape? ‘It’s a hard physical task to keep it from leaking—that was my starting point,’ he says. ‘Gas is inherently slippery stuff. I’ve done a lot of gas chromatography over the years, where we compress hydrogen and other gases to run the equipment, and it’s just plain impossible to suppress all the leaks. And my wife, who was the supervisor of our little town here, figured out that 20 percent of the town’s water was leaking away through various holes. It turns out that’s true of most towns. That’s because fluids are hard to keep under control, and gases are leakier than water by a large margin.

Continue reading

The Simple, Lovable Sidewalk

sidewalk By Peter Galuszka

Forever humble, the simple sidewalk is becoming an issue in land planning and transportation.

In densely-populated populated urban areas, sidewalks have been a staple of living since the time of the Ancient Greeks. They were classics in the familiar grid plans that marked most American towns in the 19th and early 20th centuries.

It all changed after World War II when thousands of veterans came home with access to cars and cheap mortgages and builders started constructing car-centric neighborhoods. The cookie-cutter plan included big subdivisions with only one or two access points, lots of cul de sacs and long streets and wound around until they emptied into the few access roads.

You couldn’t walk anywhere. The feeling was, with the complicity of such car-centric bodies as the Virginia Department of Transportation, that you didn’t need sidewalks because the kids could play in the cul de sacs and anyone could drive.

This started to change a decade or so ago as pe0ple wanted to walk more to the library, the store or to visit a neighbor. Suburban planners are taking this into consideration and are “encouraging” developers to put in sidewalks.

A couple problems here:

First, although the Tim Kaine administration changed VDOT policy to advocate more intersecting streets in new developments along with sidewalks, the policy has been watered down under pressure from the development industry.

The other problem is that while it is a simple matter to put sidewalks in new projects, retrofitting them in older ones is tough. It is expensive, there are rights of way issues and sometimes the terrain doesn’t lend itself to them. And, when sidewalks are put in, they merely connect with gigantic feeder roads where one might have to walk a half a mile to a stoplight just cross safely, as is the case in one instance in Chesterfield County.

For more, read my recent pieces in the Chesterfield Monthly and Henrico Monthly.

Building Connectivity in Suburbia

LinkedIn office building in Sunnyvale, Calif. --insulated from the street by a parking lot and a landscaping berm.

A LinkedIn office building in Sunnyvale, Calif. — insulated from the street by a parking lot and landscaping berm — hews to traditional “sprawl” design. The rest of the campus does better but still misses an opportunity to connect with the surrounding community.

Sunnyvale, Calif., wants to reinvent a 60’s-era industrial office park as an innovation district. It’s making progress but suburban sprawl is not an easy habit to break.

by James A. Bacon

LinkedIn Corp. has built a wildly successful business model around connecting business people through cyberspace. Ironically, the fast-growing Silicon Valley corporation gives short shrift to connecting people in the physical world. Its new corporate campus in Sunnyvale, Calif., located in an emerging “innovation district,” misses an opportunity to foster creativity by encouraging employees to interact with others outside the organization.

In some ways, the LinkedIn campus represents an improvement on the traditional sprawling settlement pattern of Silicon Valley. The facility is higher density than neighboring office and industrial buildings in Peery Park, one of the valley’s oldest office parks. The company conserves acreage by replacing open parking lots with a five-level deck. The buildings have interesting architectural features and the landscaping is attractive.

Erik_Calloway

Erik Calloway

But the LinkedIn complex falls short of what it could have been, Erik Calloway told me when I visited the San Francisco Bay area this spring. An urban designer with Freedman Tung & Sasaki, the firm engaged to help the City of Sunnyvale develop Peery Park as an innovation district, Calloway had ridden his motorcycle from San Francisco to show me how urban design can stimulate — or dampen — economic innovation. If only LinkedIn had tweaked the layout, he says, it could have opened the campus to the outside world, contributing to the vitality of the district and perhaps to its own enterprise. Says Calloway: “They weren’t focused on connections to the district.”

For much of American history, major corporations located major facilities in downtown business districts in order to avail themselves of the wealth of professional services, particularly bankers and lawyers, located nearby. Then in the post-World War II era, many corporations fled decaying cities to the suburbs, setting up self-contained campuses or office parks that were seen as serene, tranquil, far from the madding crowd. Now the movement is reversing, as corporations seek to gain competitive advantage by building innovation ecosystems in which they engage in intense interaction with collaborators outside the organization.

Many cities are evolving “innovation districts,” a concept popularized earlier this year by Bruce Katz and Julie Wagner with the Brookings Institution. Innovation districts, they write in “The Rise of Innovation Districts: A New Geography of Innovation in America,” are where “leading-edge anchor institutions and companies cluster and connect with start-ups, business incubators and accelerators.” Typically, these areas are physically compact, walkable, bikeable and transit-accessible, and sport a rich variety of amenities from restaurants to apartments.

Innovation districts are found mainly in cities built in the pre-automobile era because those districts possess the attributes — research universities, walkable streets, higher densities, mixed uses and an inventory of affordable older buildings — required to stimulate enterprise formation. Sunnyvale is notable for its effort to carve an innovation district out of mid-20th century, autocentric suburbia. If the Sunnyvale experiment is successful, it could provide a new economic-development template for suburbia.

As someone who combines the academic viewpoint of Katz and Wagner with a hands-on practice of an urban planner actually working to create and implement an innovation district, Calloway provides a valuable perspective.

Cities are changing from the scattered, low-density pattern derisively known as “suburban sprawl” to more compact forms, he says. Unlike some critics he doesn’t castigate sprawl as a disaster. Citing research he has done for an upcoming book on the subject, he asserts that sprawl arose after World War II in response to social and economic forces such as mass production, the spread of automobile ownership and construction of freeways. Developing cheap land by applying assembly-line principles to urban planning provided affordable middle-class housing to millions of Americans. “It worked well at the time. It provided a lot of wealth and prosperity.”

Silicon Valley was developed along that model: low-density suburbs served by streets designed with automobility foremost in mind. But sprawl created problems, Calloway says. In Silicon Valley traffic congestion and pricey housing were accentuated by sharp growth limits and surging demand created by the extraordinary success of the region’s high-tech industry. Unlike nearby San Francisco, which evolved to greater densities over the decades, the Valley has not. With some of the highest real estate prices in the world, it has largely displaced the poor and working class.

On a more global level, the nature of work has changed as the economy has evolved from a hierarchical, assembly-line model to a digital economy. Selling more stuff cheaper is no longer the primary path to prosperity, Calloway argues. Access to raw materials, transportation and abundant labor are secondary considerations. Now the mantra is innovation. Take shoes, for example, a product that humans have been fabricating for centuries. The challenge for a company like Nike isn’t to keep costs down so it can sell shoes cheaper than anyone else — although cost is a consideration — it’s applying technology to create shoes that have features that shoes never had before, such as, perhaps, the ability of buyers to customize their shoes online.

The question, then, is how to organize companies and their employees to maximize creativity and innovation. Continue reading

The Emerging Exurban Dead Zone

Hope Plantation, Bertie County, N.C., circa 1800. The McMansion of its day.

Hope Plantation, Bertie County, N.C., circa 1800. The McMansion of its day.

by James A. Bacon

The Northern Virginia exurbs, like exurbs across the country, are cruising for a bruising. EM Risse would never express himself so inelegantly or imprecisely but that’s the thrust, in colloquial terms, of a new essay, “The Great Submergence,” he has posted on his website.

The United States economy, argues Risse, a former Bacon’s Rebellion contributor, is in the midst of a profound shift — what he calls the U Turn — away from the scattered, low-density pattern of growth widely referred to as “suburban sprawl” (a label he avoids as a “core confusing word”) toward infill and re-development of the nation’s urban cores. This trend, which is taking place for reasons amply documented on this blog, has profound implications for homeowners and political jurisdictions on the metropolitan edge where landowners, developers and speculators valued land with the expectation that it would be developed some day into shopping centers, office parks and residential subdivisions.

Given the cost of providing transportation, utilities and municipal services, the logical limit for development in the Washington metropolitan region is about 20 to 35 miles from the metropolitan center in Washington, D.C., Risse writes. Land beyond that limit, he contends, is experiencing collapsing demand as people seek to live closer to the metropolitan core, closer to jobs and amenities in walkable communities with more transportation options. That collapse he calls “the Great Submergence.”

Some clusters of development may adapt and survive but others will be economically unsustainable and wilt away. Another phrase for “wilt away” would be “dry up and blow away,” just like western mining towns when the claims ran dry, just like Great Plains farming towns during the Dust Bowl and Depression. Risse’s home town of Warrenton, he warns, is the “bulls eye of the danger zone.”

As demand evaporates for single-family dwellings on large lots in remote locations, land and housing prices will fall. Every new single-family dwelling built in Greater Warrenton-Fauquier (and other communities situated more 25 to 30 miles from the metropolitan center) will serve to drive down the value of existing properties. Writes Risse:

The downward trend will be exacerbated by the fact that there are dwellings selling BELOW their replacement cost. Further, there will be many scattered Units that have not been maintained, which will further deflate the market via assessment / appraisal “comparables.”

Declining land and improvement values, he says, will have a devastating impact on municipal tax bases in this exurban dead zone as well as household net worth, much of which is composed of housing equity.

Bacon’s bottom line: I’m in 95% agreement with Risse. The reason I hesitate to say 100% is that there are powerful forces at work to sustain “sprawl,” the most important of which is the slow pace, due to zoning restrictions, at which urbanized jurisdictions close to the Washington metropolitan core can free more land for more compact, higher-density development. If demand for housing exceeds supply in Washington’s urban core, growth will default to exurban communities (beyond the 25-mile radius) planned and approved in the 2000s simply because there is nowhere else to build.

With that caveat aside, I share Risse’s larger concern. A dozen or more exurban counties on the metropolitan fringe of Washington, Richmond and Hampton Roads are likely to experience deflating land values, shrinking real estate property revenues and chronic fiscal stress. Their scattered, low-density settlement patterns have high embedded costs and local governments will be hard-pressed to maintain the supporting services and infrastructure. Once the newness wears off and depreciation sets in, these places will become worn, shabby and dilapidated.

Driving back from vacation on the North Carolina coast a couple of weeks ago, I passed through a dozen hamlets and crossroads in farming communities. I was shocked to see so many boarded up and tumble-down buildings that property owners had simply abandoned. The knowledge economy has passed these inland communities by. Sure, the real estate is cheap but no one wants to live there anymore. The houses don’t even have for-sale signs on them. The price of better houses is so low that it’s not even worth patching up the decaying ones. Virginia’s exurbs have not reached that stage yet. But give them time. Let the shiny newness wear off. In 20 years, we could see the same thing.

Those who miss Risse’s writing on Bacon’s Rebellion should check out the “Current Perspectives” on his website.

Update: Ed Risse has responded to Larry Gross’ comments on this post in the form of an essay, “Blogging, Geographical Illiteracy and the Great Submergence.”

Hope for Small Cities

small_cities

by James A. Bacon

Many economists contend that the economic deck is stacked against America’s small cities. Labor markets in the knowledge economy favor large cities; corporations are drawn to large labor markets where they have a bigger pool of prospective employees to recruit from; employees are drawn to larger labor markets where they have more employers to choose from. By this line of logic, smaller metros suffer an enduring competitive disadvantage. Geographically speaking, the rich get richer and the poor get poorer.

But Joel Kotkin, perhaps America’s most vocal urbanism critic, says decline is not inevitable. While the smallest metropolitan/micropolitan regions (under 100,000 residents) have lost population, a group he classifies as “small cities” (regions between 100,000 and 250,000 residents) actually has seen 13.5% population growth since 2000 — 10% percent faster than the national growth rate, and twice that of New York, Los Angeles or Chicago.

Small cities, Kotkin suggests, are large enough to support the basic infrastructure — hospitals, schools, airports, broadband — critical to economic growth. Not all have prospered, but many have. He categorizes the successful small cities into four categories: (1) Boomer Boomtowns, which are attracting retiring Boomers; (2) Energy Towns, which are benefiting from the fracking revolution, (3) College Towns and (4) Government towns, which benefit from federal and state government spending, typically military spending and state capitals.

Recent performance suggests that small cities have better economic prospects than commonly acknowledged, Kotkin argues, although he quickly adds that declining government spending could hurt the Government Towns and that all small cities face a challenge of attracting young families.

Virginia’s small cities have been fair-to-middling performers in comparison to the 167 cities ranked according to a composite of four metrics: population growth, job growth, real per capita personal income growth, and growth of regional GDP per job, all between 2000 and 2012. Three of Virginia’s “small cities” fall into Kotkin’s category of College Towns. The economies of Charlottesville, Blacksburg and Harrisonburg are dominated by local state universities. (See the list above.)

I have long argued that the challenge of most of Virginia outside the urban crescent is to decline gracefully. In the long run, it is hopeless to prop up every small mill town through economic development subsidies. The best bet for Southside Virginia, Southwest Virginia and the Shenandoah Valley is not to intensify industrial recruitment — it’s to concentrate growth in cities that are large enough to potentially become self-sustaining in the knowledge economy.

I know that’s a hard pill for many to swallow, but if rural Virginians want to create a future for their children anywhere near home, it will most likely be in a city large enough to recruit and retain 21st-century jobs. As a practical matter, that means focusing resources on the five cities listed above, plus Roanoke, Lynchburg, Bristol-Abingdon and Danville.

These regions also can help themselves by embracing the smart-growth and smart-cities strategies advocated on this blog. By keeping the cost of government low, they will have more leeway to provide an attractive trade-off between taxes and urban amenities that creative-class workers are looking for.