by James A. Bacon

Over at Cardinal News Dwayne Yancey makes a stab at calculating the economic impact on Virginia if President Trump and his chainsaw-wielding demiurge Elon Musk succeed in their goal of hacking down the size of the federal workforce by 60%. His concern is that two-fifths of Virginia’s personal income tax revenue comes from Northern Virginia, that a significant amount of those funds are redistributed to school districts in his corner of the state, and that, therefore, even Southwest Virginia potentially has a lot to lose.

Meanwhile, at the Richmond Times-Dispatch columnist Jeff Schapiro explores the political implications as Democrats seek to turn the impending bloodletting to their favor against Virginia Republicans, who seem unable to oppose the draconian Trump-ordered mayhem or articulate a rationale for why the cuts might actually be a good thing for the Old Dominion.

Adding to Virginia’s peril, suggests Yancey in a line of logic sure to be adopted by Democrats, is that the Muskian chainsaw also could devastate federal contractors who round out most of the Northern Virginia economy not comprised of federal bureaucrats. Factor in the multiplier effect of all those lost jobs and all that lost spending and NoVa could enter into a recession the likes of which it has never seen before and could drag down the rest of Virginia with it.

Expect apologists for the status quo to elaborate upon that line of argumentation. Virginians will be hearing how economic apocalypse is just around the corner.

Permit me to spin an alternate scenario. While there will be short-term pain for sure, chain-sawing the federal budget could be the best thing to ever happen to Virginia. It could be just the trauma NoVa needs to emancipate itself from dependence upon federal largesse, deconstruct its cost-plus-contract culture, and develop a truly innovative technology sector.

Nothern Virginia is the wanna-be tech giant that could never quite get off the ground. If you’re a believer in static analysis, the region has everything it takes to become a world-class competitor to Silicon Valley. It has the most highly educated workforce in the U.S. which means the most highly educated workforce in the world. It has a wealth of entrepreneurial start-up talent. It has a network of angel investors and venture capitalists eager to fund promising new companies. Unsurprisingly, NoVA routinely ranks highly in the Inc. 5000 rankings of fast-growth companies.

A region of roughly two million people, NoVa has critical mass that makes it an attractive place for companies to locate in order to tap the deep, talented labor market. It has one of the densest networks of fiber optic cable, and it hosts the world’s largest cluster of data centers. It has access to two major airports, facilitating national and international travel. There was a time — I don’t hear much talk of it anymore — that NoVa aspired to surpass Boston and Austin to become the No. 2 technology center in the country.

It never happened. Why? In a word, one of the region’s greatest assets — its access to the federal government, the world’s largest customer — was also its greatest liability. NoVa companies developed the arcane credentials and expertise that allowed them to compete for federal contracts. However, the corporate culture that enables a company to win federal business is antithetical to building companies that can compete in the global economy. Very few NoVa corporations have made the leap from Beltway Bandit to enterprises serving global markets. Expertise in federal procurement rules does not translate well into Silicon Valley-style innovation.

Musk the Monster Slayer has signaled that he is coming next for the Defense Department, which arguably has the most convoluted, overhead-inducing and innovation-killing procurement rules on the entire planet. If he succeeds, Northern Virginia’s leading private-sector industry will lie in ruins. Dozens (maybe hundreds) of companies will go out of business, and tens of thousands could lose their jobs.

Then they will rebuild.

Anyone familiar with the economic miracle that was California knows that the defense sector once was a pillar of the economy. At one point (my chronology is a bit fuzzy), defense companies took a huge hit. There was angst and maelstrom. But the recession freed up talent and resources that were redeployed to the tech sector. The California economy grew back bigger and stronger than ever before.

That is the potential that awaits Northern Virginia. Freed from the enervating culture of federal procurement, NoVa has the resources to become a national technology dynamo. Virginians will have to weather an economic storm, but they should not fear such a future. Indeed, they should embrace it.