Category Archives: Economy

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.

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.

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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.

A Confederacy of Cynics

But Maureen gave them back

But Maureen gave them back

By Peter Galuszka

It was an odd scene. The first floor security point at Richmond’s federal court was filled with spiffy, middle aged blonde women all chattering loudly as the grandfatherly guards tried to herd them through. Some had so much bling, they had to go through the metal detector three times after removing yet another trinket or belt or watch or bit of jewelry. Normally, the line would be the usual mob of family, reporters, sketch artists and stray onlookers.

On the  corridor outside the seventh floor trial room, it might have been cocktail hour at the Republican Governor’s Association. The same pack of blondes was there. Many had large handbags stuffed with big pillows for their day on the hard wooden seats. Hugs and kisses everywhere. One man was especially natty in a Navy blue blazer, open necked striped dress shirt and a year-round tan. Palm Beach, anyone?

A younger woman kept bumping into people amidst the din as we all waited to be let in the courtroom. She sported a thin Louis Vuitton handbag. Then it struck. This is Maureen McDonnell’s cheering section for closing arguments that lasted from morning until early evening on Friday. That designer name, along with Oscar de la Renta, seems to have been her favorites when she pushed businessman Jonnie Williams to take her on shopping sprees or send her things.

After the Virginia State Police called in for an interview in February 2013, she packed up the goodies and sent them back to Jonnie. In some cases, these were items she had received two years before. Suddenly Maureen wanted to give them to “charity” or to one of the Williams’ daughters.

And that — the curious timing of scores of seemingly unrelated events over a period of more than two years from 2010 to 2013 — is what the seven men and five women jury must decide this coming Tuesday.

The point isn’t the gaucheness of the designer label stuff. Ms. McDonnell wasn’t a public servant and normally could accept whatever she wanted from Williams or anyone else. If it were stock, her husband, the former governor, would have to report it on his annual Statement of Economic Impact form. One year, Ms. McDonnell sold her stock in Williams’ company Star Scientific before the reporting deadline only to repurchase it the next year. The conclusion seems obvious, but draw your own.

It’s these kinds of coincidences that really do add up, argued David Harbach, a deputy at the public integrity section of the U.S. Department of Justice, who set up a powerful case against the McDonnells by connecting the evidentiary dots. Jonnie meets with the couple, the inaugural dress comes up and is dismissed by the governor’s staff but Maureen gets a Williams spending spree in New York as a consolation prize.

Or take the Bob McDonnell. He’s setting up meetings for Williams to break free possible research on his product by top state schools just as he is mulling of terms for a $50,000 loan from Williams (his staff is kept in the dark about how much he is in hock to JW, a self-styled “Southern Boy”). The pattern seems rather obvious after five weeks of mucking through a swamp of often confusing evidence. An email comes in, a deal with Jonnie for something personal is struck, a check arrives, an email is sent, and a luncheon at the Executive Mansion or some other event featuring the Governor or the First Lady or both pushing Anatabloc, Williams’ anti-inflammatory nutraceutical, is scheduled.

“He wrapped himself up in the flag of the Commonwealth and stomped on it,” Harbach told the jury. “This is not how governors behave. Don’t stand on the coattails of Thomas Jefferson and Patrick Henry. Don’t let them do this.”

For the jury to do just that, it will have to weigh a key point of law. This is how far the idea of “honest services” goes with the wire fraud counts. It basically means that it is a crime if public officials deny their honest services to their citizens by accepting bribes or become involved in a conflict of interest. Prosecutors argued there doesn’t have to be a clear quid pro quo, something defense attorneys William Burck and Henry Asbill hammered against for hours. Honest services fraud has been used to nail former Alabama Gov. Don Siegelman, former U.S. Congress (and top Navy pilot in Vietnam) Duke Cunningham and former Illinois Gov. Rod Blagojevich.

The Supreme Court has moved to define more narrowly how “honest services” can be defined but it still is on the books. A crucial turn in the drama will come Tuesday, when U.S. District Judge James R. Spencer gives his extensive instructions to the jury. His definition of “honest services” will be an important part of that. Meanwhile, if you demand a “smoking gun” (whatever that is supposed to mean), I suggest you get back to watching Perry Mason reruns.

The defense spent a lot of time bringing up the McDonnells’ troubled marriage and financial debt. This is sad, tough stuff to go through day after day. And it is easy for anyone to be drawn into pangs of sympathy for hyper-anxious, lonely Maureen or serious, well-meaning Bob, “Boy Scout of the Year,” according to one friendly witness.

Contrasting that, of course, is the greedy, scheming Maureen (a “nutbag,” according to a staffer) and a self-absorbed, double-dealing Bob who should have known what is right and wrong for a public official to do. Conversely, he also would know how to hide stuff on his disclosure forms. We tend to forget that he was state attorney general not that long ago.

The creepiest part of all of this is how slyly the defense has humiliated Maureen as part of the “throw her under the bus” strategy. Yet she is going along with it, as her husband of 38 years. In doing so, the McDonnells are doing an amazing thing. They are actually beating Jonnie Williams on the cynicism scale and even the prosecution says he’s a criminal. No doubt about it.

I agree with the prosecution that Bob is a phony. On the stand, he was by turns humble and scolding. He casts himself as a public servant so pure of heart that it was almost a joke to listen to. He was always “accepting responsibility.” But he was always blaming someone else. Maureen, of course. His former brother-in-law screwed up the books at the troubled beach houses. He didn’t report a few golf outings on Jonnie’s tab at the posh Kinloch club in Goochland County because his staff screwed it up.

“This is a sad case, “Michael Dry, a prosecutor, told the jury Friday. “It is sad for the McDonnell family and sad for the state of Virginia.”

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

Bob McDonnell’s Big Decision

 smith_mountain_lake2By Peter Galuszka

It was a gubernatorial quandary only Virginia could have .

In the summer of 2011, former Gov. Robert F. McDonnell was ready to take a few days off. He and his family had been going to Smith Mountain Lake, a popular destination near Roanoke with lots of golf courses and seven-figure lakeside homes.

At his corruption trial this week, McDonnell testified that his summer getaway had been bankrolled by Delta Star, a company with a big factory in Lynchburg that makes portable industrial electrical gear. The firm had put him up at one of their lakefront houses for $2,474 in 2010, according the VPAP, which runs a data base about this kind of thing.

Summer 2011 had proved a big problem, however. His wife, Maureen, had become fast friends with Jonnie R. Williams a rich Goochland County businessman. Williams had given Ms. McDonnell a $50,000 check and also paid $15,000 for her daughter’s wedding luncheon that June. She had traveled with Williams helping promote Anatabloc, Williams dietary supplement that has since been pulled off the market by the U.S. Food and Drug Administration.

The problem was — whose million-dollar-plus house would the McDonnells use? Williams very much wanted the McDonnells to stay at his sprawling domicile on the tip of a peninsula. Delta Star wanted the McDonnells to stay at their place.

What to do? They split it. The McDonnells stayed at Williams’ house for a getaway valued at $2,268 value according to VPAP. He also laid on a Ferrari that the governor could enjoy driving on the way home.

Delta Star made sure the family was entertained and fed. They provided the family with their very own boat to cruise the lake and catered meals – a $1,892 value for a long weekend.

Delta Star’s feelings didn’t seem to be hurt since they laid on another entertainment gift worth $10,182 in 2012.

And while we’re talking lakeside homes, guess who else also stayed at Williams’ place? Former Atty. Gen. Kenneth Cuccinelli, that’s who – to the tune of $3,000 in 2011. We haven’t heard much recently from the former firebrand, hard right politician but he is on the witness list.

And so it goes. And, by the way, getting vacation favors is very common. Check out former Gov. Tim Kaine’s expensive sojourn on the turquoise blue waters of the Caribbean Sea.

It’s not the only way Virginia’s extremely lax ethics laws work.

If you use your PAC, you have an automatic teller machine. For instance, Tim Hugo of Fairfax, the third-ranking Republican in Virginia’s House of Delegates, expensed nearly $30,000 for travel and food and $9,400 for his cellphone over an 18-month period. As a spokeswoman for the State Board of Elections told The Washington Post’s Laura Vozzella in 2013, “If they wanted to use the money to send their kids to college, they could probably do that.”

Maureen McDonnell and Sexism

maureen_and_bob(1)By Peter Galuszka

Sitting for hours listening to former Gov. Robert F. McDonnell testify in his federal corruption trial makes one wonder exactly what his values are, especially as they relate to women.

His entire legal strategy is to “Throw Maureen Under the Bus” – namely his lawyers and those of his co-defendant wife Maureen are portraying Ms. McDonnell as a “basket case” who set up a lot of funny meetings with snake oil salesman Jonnie Ray Williams Sr., accepted expensive gifts from him with promptly telling her husband, and communicated with him 1,200 times in about a year and a half (one day it was 52 text messages.)

She is bad and deceptive. He is good and didn’t know much about her messy friendship with Williams. She is guilty. He is innocent (or so it goes).

Gov. Bob, helmet hair perfect as usual, took the jurors through a horrible litany of his long-decaying marriage to college sweetheart Maureen. While she was screaming and intimidating her staff, he was slogging through “the business of governing” for endless hours every day.

When she approached Ann Romney, wife of Republican presidential candidate on the campaign trail in 2012 and offered the woman who suffers from MS some “Anatabloc,” Williams’ miracle pills, Bob overhead it and was “embarrassed.”

There is something deeply disturbing, however, about McDonnell and his attitudes. He seems to have come from a bygone era when men worked long hours, held major responsibilities and answered to the most important thing in their lives – their overweening ambition.

The husband was ordained by God to do great things, be a Boy Scout, and write his name in history books. His wife was to stay barefoot and pregnant in the kitchen knitting socks or selling silly vials of creams.

McDonnell has since disowned this little passage he wrote at Regent University (Pat Robertson’s school) back in 1989 when he was a graduate student, but it seems strangely relevant. He tried to create some kind of conservative, faith-based government paradigm that would cut taxes, open charter schools and the like. He wrote:

“Further expenditures would be used to subsidize a dynamic new trend of working women and feminists that is ultimately detrimental to the family by entrenching status-quo of nonparental primary nurture of children.” The kicker is his view that feminism is one of the “real enemies of the traditional family.”

Well, a hell of lot of good that thinking has done since he has steadily, deliberately humiliated his wife in a bid to avoid jail time. A parade of defense witnesses, mostly McDonnell cronies, have humiliated Ms. McDonnell as a grabby, irrational, fashion-mad bimbo who just didn’t get it when Bob patiently told her that the stock she held in Star Scientific, Williams’ firm, had lost half their value and were a bad investment.

There are other giveaways that paint McDonnell as a self-important, entitled, superior little prig. Maureen had an apparently successful home-based business selling nutraceuticals like face creams. The Bob that may have sounded so pointlessly “womanish” but it is a big business. When he ran for statewide offices, he told Maureen to nix the biz.

Now wait a minute. Why should he tell his wife that she can’t run her own business she built up because his mission as a conservative political savior is just too important? Why does he get to decide?

One reason has roots in a kind of mid- 20th century philosophy that one used to see in black and white movies and television shows. There has been a deluge of testimony about the Virginia suburbs of DC roots of the McDonnells. Lots of military, conservative, family values, do-goodism, ticket punching (making colonel or the appropriate GS level position) having some silly affection for the Redskins or golf club bags with your school logo and so on. But the most obnoxious attitude is that the self-pride that one is doing something very important for his country and fellow citizens.

If you are male, you get to wear this cloak. If you are a woman, your first and foremost goal is to mind the kids and support your man and be a handmaiden to HIS career and ambitions. Watch the 1950s “Strategic Air Command” film” with Jimmy Stewart as a ballplayer pilot and his dutiful wife June Allyson. He makes the big decisions and flies the big bombers. She’s always waiting at the air base fence for him to come home so she can cook him fried eggs.

But McDonnell has a bigger problem than just this over-the-top sense of duty. By his own testimony, McDonnell is seriously addicted to political ambition. It is his oxycodone. His heroin. He gets a real kick by planning the next stage (vice president? president?) Maureen is left by herself and her screaming fits. Bob just tunes her out and spends as much time traveling and in his office as he can.

As he testified, McDonnell got a buzz from being a state legate and an even bigger buzz by running for attorney general and governor. One woman who seemed to be cheering him every step of the way was Janet Kelly, who ended up being Secretary of the Commonwealth when he became governor. She testified that when he wanted her for that spot, she told him flat out she could not work with Maureen. She didn’t.

Family values, anyone?

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

“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.

Is Pretentious Richmond Really Hooterville?

green acresBy Peter Galuszka

Is Richmond really Hooterville?

By golly gosh, that’s the impression that one might come away with after 14 days of testimony at the corruption trial of former Gov. Robert F. and Ms. Maureen McDonnell.

Pretentious Richmond likes to see itself as a genteel and sophisticated historic relic with a Southern snob appeal rivaling Charleston, S.C.; an architecture and culture that worship the English (although the best of the Brit lot didn’t always end up here); and basic unfriendliness. At the upper levels, people whose can’t trace their families back several generations are not really welcome unless they have lots of money, which bespeaks Richmond’s more honest background as a service and industrial town.

“RVA” as its promoters like to now brand it, is supposed to be a tourism and great restaurant destination with professional service (that’s a laugh). Residents are supposed to enjoy a high life that goes well beyond a burg of 1.25 million trapped in the distant shadows of Washington, D.C.

To be sure, some younger Richmonders are thankfully well beyond these handcuffs. So are a passel of “come heres” who have brought the town more sophistication from Germany, Japan or Croatia or even from  even from such Deeper South spots as Charlotte and Atlanta — Charleston being little more than a tourist trap and shipping center. Richmond does have nice museums, art galleries and a popular baseball team that they’re trying to ruin by moving it to a congested, politically orchestrated spot.

But you’ve got to wonder. In recent trial testimony, the story was told of Jonnie R. Williams, star witness for the prosecution, who tried to court (among many others) Dr. George Vetrovec, a researcher at Virginia Commonwealth University. Williams was trying to get VCU’s and the University of Virginia’s imprimatur on Anatabloc, Williams’ over-the-counter anti-inflammatory so questionable it has just been pulled off the shelves nationally. The former used car salesman also dotted doctors’ meetings with props from Johns Hopkins University as if they were supposed to impress the supposedly lower-tier Virginia folks. To their credit, many state officials didn’t bite.

Dr. Vetrovec thought he was going with Williams to the Executive Mansion to sample some of Ms. McDonnell’s cookies which are supposed to be delicious. Instead, it was a reception for dynamite director Steve Spielberg, in town to film “Lincoln” in October 2011.

Wowie! Zowie! THE Spielberg! “This is the most unusual event you can ever imagine,” the doctor said. As readers can see from the link, Vetrovec’s statements were reprinted in the London media, giving Richmond a somewhat laughable reputation.

Huh? Where the hell are we? “Green Acres?” Go to any city that Richmond aspires to be like Atlanta, D.C. or New York. No one would go nutty over Spielberg-spotting. Movie stars and directors are like so, so what? But Richmond was mad about “Lincoln” and was chock-a-block with all the local stand-ins they hired. You couldn’t walk downtown without tripping over the beard of an extra that he might have waxed with bacon grease to give it an 1865 look and aroma.

My own sister was an extra in “The Exorcist” in Georgetown back in the 70s but she never regarded it as the high point of her life. It was more an amusing anecdote to be shared over a glass of wine. When I worked in Moscow in friendlier times in the 1990s, I was driving downtown near a hotel. I was amazed since it was covered in bullet holes – even more so that I didn’t hear the shots although I lived nearby. Turned out it had been a prop for a Val Kilmer movie and they hadn’t cleaned it up yet. Muscovites did not gush. They walked silently by.

So are Richmonders really that impressionable? Is it a deep sense of being second rate? Is it an over-sized turnip truck? Why were the McDonnells so impressed with Williams’ Ferrari that they had 25 pictures of them with it? Had they never seen a Ferrari before?

There’s the $5,000 bottle of Louis XIII cognac in New York’s Four Seasons hotel. Later, Williams spent something like $36,000 for a four-day getaway for six people including the McDonnells at a posh Cape Cod resort. The six tippled 16 glasses of Louis XIII for something like $125 a snifter. Their dinner menus included lobster, duck, steak and fish – all on Williams’ tab.

And on it goes – the Rolex, Louis Vuitton, Oscar de la Renta, the golf clubs and so on.

The obvious corruption is worrisome and hopefully the  federal (not state)  court will address it.The extra blow is that Richmond doesn’t just look bad, it looks ridiculous. It seems like a Third World capital, perhaps Jakarta, where traders and investors used to bring special goodies for Mrs. Suharto (a.k.a. “Mrs. Ten Percent.”)

Will Richmond be regarded as too simple to handle business, culture, science and education in  a much more interconnected and increasingly sophisticated world? Will foreign business scouts show up at RIC with suitcases full of cash, or maybe fake gold trinkets? Could it be that the McDonnells have it right — Richmond is really Hicksville after all?