Monthly Archives: March 2018

The Battleground of Race and Public Memory

The University of Virginia and Thomas Jefferson’s Monticello have just wrapped up an international symposium, “Universities, Slavery, Public Memory & the Built Landscape.” The conference, a great success according to the symposium website, provided a forum for “a free-ranging conversation about researching the enslaved past, disseminating findings to a broader public, and breaking down disciplinary boundaries as we collectively work to tell a fuller story about our own pasts.”

According to the Richmond Times-Dispatch, the subject of reparations came up more than once.

Said Ana Lucia Araujo, a Howard University professor of history:

This very city and campus are living examples of how such public battles over public memory can unfold. But where reparations for slavery are increasingly accepted and embraced by governments and other institutions, there is usually a great silence surrounding the idea of financial reparations for slavery.

Symbolic reparations touted by government and universities — renaming buildings, adding memorials and plaques, creating commissions, may not be enough.

Then there was this from Craig Wilder, author of “Ebony and Ivory”:

A lot of the universities have launched reports, but they have launched reports and studies somewhat reluctantly. The question of reparations was, in part, a reflection of how a lot of colleges and universities got to the point of studying their histories … which was often driven by students.

It’s impossible for us to know whether comments about reparations were typical of the sentiments expressed during the conference or cherry-picked by the Times-Dispatch reporter because they were controversial. And one can only conjecture whether the dialogue at the international symposium will reflect the tenor of the upcoming “Teaching Race at UVa” seminar, the purpose of which is to inspire UVa faculty to revise their course syllabi to “present reality of race and racism both locally and nationally.”

My fear, however, is that the sentiments expressed are widely shared by the “subject matter experts” who will be teaching the “Teaching Race at UVa” sessions. If I am correct, the Leftist views espoused at the “Universities, Slavery, Public Memory & the Built Landscape” conference will inform the perspectives propagated by the “Teaching Race at UVa” seminar, which will alter the syllabi of a wide range of courses taught at UVa, which in turn will shape the worldviews of a new generation of students. Leftist thought might be diluted in the process, but the flow of influence will be entirely one way.

The study of slavery, reconstruction, Jim Crow, racial prejudice and desegregation are entirely appropriate subjects for a university to undertake. Indeed, as a former student at UVa and the Johns Hopkins University of slavery, the Atlantic slave trade, and African history, I find myself intrigued by much of the symposium’s subject matter. Furthermore, I agree that it is appropriate to use history as a tool to illuminate contemporary society. We are, after all, products of the past.

What worries me is the narrow range of intellectual perspectives that are considered. The historic focus on past racial injustices is part and parcel of the larger obsession with racial and ethnic disparities today. The underlying assumption is that disparities in income, education and other outcomes are the result of America’s grievously flawed institutions and continued white privilege. The modern academy gives very little attention to the possibility that over the past 50 or so years the modern welfare state, social engineering projects and social justice initiatives have backfired badly, harming those whom the Left purports to help.

The obsessive focus on race represents a form of intellectual doubling down on the bad bet that once Civil Rights were affirmed for all, government then needed to intervene proactively to address equality. African-Americans especially have been the subjects of one botched policy experiment after another. Thus we have witnessed the devastation of intact neighborhoods by urban renewal, the concentration of the poor into housing projects, the undermining of the family structure by the welfare state, the denigration of “bourgeois virtues” that facilitate upward mobility, the assault on disciplined behavior in public schools, the push for lower-income households into home ownership and the subsequent obliteration of wealth after the housing crash, and most recently the credo that everyone is entitled to a college education despite overwhelming evidence that low-income Americans are disproportionately likely to drop out before earning a degree and accumulate debt they can never discharge.

While these policy disasters have afflicted low-income Americans of all races and ethnicities, they have devastated African-Americans most of all. The Left, fixated on race, identity politics, and the sinfulness of America, is unwilling to acknowledge its grotesque failures. Instead, it has adapted to the persistence of poverty and social breakdown among African-Americans (replicated to various degrees among Indians, Hispanics and whites) by finding racism in micro-aggressions and blaming poverty on ever-more-subtle forces of institutional racism.

That’s the problem I have with these academic seminars and symposia. Far from fostering “free-ranging conversations,” they tolerate only a limited spectrum of views. They ignore strains of thought that would threaten their sinful-America paradigm. Instead of embracing a positive approach — how can individuals and communities lift themselves up from poverty — they pursue a divisive, zero-sum game. Reparations in the United States is a non-starter. The idea of collectively punishing one race for the sins of committed by members of that race more than 100 years ago in order to repay the descendants of the victims is intellectually incoherent. Not only does the idea stir great resentment, it distracts us from the proper task at hand — identifying policies that actually work.

U.S. Electricity Demand Falls Again

Source: Oilprice.com

U.S. electricity consumption fell 2.1% in 2017, according to Oilprice.com. As energy-efficiency measures have taken hold, electricity sales have declined seven in the past 10 years. Such numbers do not bode well for electric utilities banking on increased demand growth to justify construction of new power plants. A big question is the extent to which national trends apply to Virginia.

Virginia’s economy differs from the national economy in one important way: The Old Dominion has become a dominant player in the data-center business. Indeed, one could argue that data centers are the biggest economic-development success story in Virginia of the past 10 to 20 years. Data centers consume vast amounts of electricity. And if we want more data centers, which provide a handful of highly paid jobs and loads of tax revenue, we will need to ensure a reliable supply of electricity, preferably renewable.

Dominion Energy Virginia has based the long-range planning in its Integrated Resource Plan (IRP) on an anticipated 1.5% annual growth rate in electricity demand — considerably stronger than demand growth nationally. PJM Interconnection has suggested that Virginia’s growth rate will be slower, but Dominion defends the forecast based on a more aggressive projection in the number of data centers.

The public interest calls for sufficient electricity supplies to accommodate the growing data-center industry and, down the road, a surge in demand from electric vehicles — but not so much as to burden rate payers with excess capacity.  Clearly, the trend in electricity demand bears close watching.

Just a Reminder…

The national debt has passed the $21 trillion mark. It took only six months to get there from $20 trillion. Unlike the last time the U.S. racked up debt this rapidly, the economy is growing, not in a recession. Blame whomever you want — Boomergeddon is coming. It’s just a matter of time.

The Biggest Corporate Purchase of Solar Power in the U.S… Ever

Microsoft Corp. plans to buy about 60% of the energy production from a massive solar power project in Spotsylvania County to power its data centers in Virginia. The proposed 500-megawatt solar development, called Pleinmont, would include more than 750,000 solar panels on a 3,500-acre site, which, when completed, would be the fifth-largest solar site in the country.

“This is really important to Microsoft, and we think it is really important to Virginia for several reasons,” said Michelle Patron, director of sustainability for Microsoft. “This is going to be the largest corporate purchase of solar power ever in the United States. … We think this puts Virginia on the map for clean energy.”

The Pleinmont solar farm is being planned by Sustainable Power Group LLC, or sPower, which is a joint venture of Arlington-based AES Corp. and Canada-based investment fund AIMCo, according to the Richmond Times-Dispatch.

The project still requires approval by the State Corporation Commission. The commission has scheduled a public hearing in May and is soliciting public comments.

Microsoft has said that it has met its target to power at least 50% of its data centers with clean energy by 2018, and the company wants to achieve 60% clean energy by early 2020, says the Times-Dispatch. In 2016 the company had agreed to buy power from a 20-megawatt solar farm in Fauquier County.

Bacon’s bottom line: In all the excitement over grid modernization and the rollback of the electric rate freeze in recent months, I totally missed this story. But if Virginia is on track to build the fifth-largest solar facility in the country, and if the deal represents the biggest corporate purchase of solar power ever in the U.S., that’s a big deal!

Previous reporting by the Times-Dispatch noted that Pleinmont would sell its electricity into the PJM interstate wholesale power market to companies that want to offset their electricity consumption with power produced by renewable sources of energy.

Does this deal cut Dominion Energy Virginia out of the picture as an electric power generator? Does this represent a new strategic direction for Microsoft and other data-center companies, which are driving the growth in electricity demand in Virginia? In other words, is Dominion’s electric power-generating monopoly being eroded? Five hundred megawatts is a lot of electricity — roughly half the capacity of a new, state-of-the-art natural gas-fired power plant.

Or will Dominion swoop in later, as it has in several other solar deals, acquire the Pleinmont property, and count it towards its commitment to build 5,000 megawatts of solar power, as codified in the recently passed Grid Modernization and Security Act?

One more question: What does this mean for natural gas demand in Virginia?Data centers consume electricity 24/7, but solar power generates power only 12 hours per day (with output varying by the time of year). Where will the electricity come from in off hours? Do deals like this bolster or obviate the need to build any new gas-fired plants?

Vive L’Appropriation Culturelle!

 Sacre bleu cheese! From French fries to French burgers.

Heh! Heh! From the Associated Press:

Figures released this week revealed that sales of the jambon-beurre – the ham and butter baguette sandwich, a classic of French snacking – have been surpassed by sales of American-style burgers.

The study by restaurant consultants Gira Conseil showed that about 1.2 billion ham and butter sandwiches were sold in 2017, while 1.4 billion burgers were eaten over the same period.

I love it! Good thing the French don’t have laws against cultural appropriation!

Appropriate away! I would love to see what the French can do with the  hamburger. I’ll bet they take a great thing and make it even better!

Why Are Asians and Hispanics So Healthy?

City/county ranking of Virginia health outcomes based on potential years of life lost before age 75. Source: Robert Wood Johnson Foundation

The Robert Wood Johnson Foundation has issued its annual Healthy Community report for the United States. As usual, the information is packaged in such a way as to highlight the health disparities between racial/ethnic groups. But the findings for Virginia, which the state-level report largely overlooks, do not fit the dominant institutional-racism narrative. It turns out that Asians are the healthiest racial/ethnic group by far. It also turns out that, despite lower incomes and education levels, Hispanics are healthier than whites. The only finding that conforms to the narrative is the blacks are the least healthy of any group.

The info-graphic to the right shows differences in health outcomes (potential years of life lost before age 75) by place and by race/ethnicity. The “place” metric compares the differences in health outcomes by city or county. There is a wide disparity (as also seen in the map above) between localities with high incomes and high levels of education and localities with low incomes and education. The worst pockets of unhealth are in far Southwest Virginia, Southside, the Eastern Shore, and older cities. No surprises there.

Far more interesting is the disparity between racial/ethnic groups, which many researchers and commentators persist in defining as a gap between whites on the one hand and blacks and Hispanics on the other — a gap matching the socio-economic divide and consistent with the paradigm of America as a nation afflicted with institutional racism and discrimination.

Yet of all major racial/ethnic groups, Asians are the healthiest. By far. Here in Virginia, according to the study, Asians experienced the lowest level of “premature deaths,” measured by years lost per 100,000 — only 2,600. Hispanics fared next best, with 3,100 years lost, whites with 6,200, and blacks with 8,700.

Another remarkable finding: Whites reported the highest incidence of poor mental health days: 1.6 for Asians, 2.7 for Hispanics, 3.5 for blacks, and 3.8 for whites.

Results conformed to stereotype for poor or fair health, while self-reported “poor health days” showed almost no difference between whites, blacks, and Hispanics. Asians reported the fewest poor health days.

The comparative good health of Hispanics in Virginia is all the more remarkable given that, as the report documents but takes little note of, Hispanics have lower high school graduation rates, have less health insurance, and have a higher rate of teen births than any other group.

Asians and Hispanics do not fit the dominant narrative of the relationship between race and health in the United States. It strikes me that these anomalies are worth exploring. Persuading public health researchers to dig deeper may be a hard thing to do, however. The received wisdom, once established, is a hard thing to dislodge.

Update: And then there’s this headline from the Roanoke Times: “Report finds death rates rise for white, middle-class Virginians.”

Nuclear Fortress

North Anna’s nuclear containment domes

How safe are Virginia’s nuclear power plants from terrorists, hackers and natural disasters? Let’s put it this way: Dominion worries about such threats 24/7 so you don’t have to.

In addition to interfering in U.S. elections, Vladimir Putin’s busy cyber-servants have been probing information technology weaknesses in U.S. industry and infrastructure. Sophisticated cyber-attacks have been ongoing since at least March 2016. Perhaps most alarming, the Department of Homeland Security asserted last week, Russian hackers gained access to critical control systems at unidentified nuclear power plants.

“We now have evidence they’re sitting on the machines, connected to industrial control infrastructure, that allow them to effectively turn the power off or effect sabotage, the New York Times quoted Eric Chien, a security technology director at digital-security firm Symantec, as saying. “They have the ability to shut the power off. All that’s missing is some missing political motivation.”

Journalist Ted Koppel highlighted the vulnerability of the U.S. electric grid to attack in his 2016 book, “Lights Out: Cyberattack, a Nation Unprepared, Surviving the Aftermath.” Novelists have imagined the horrifying societal collapse following the collapse of the electric grid. As for nuclear plants, the potential for radioactive contamination makes the threat even more terrifying. Fear-inducing scenarios involve terrorist takeovers, the theft of spent radioactive fuel, and jetliners slamming 9/11 style into nuclear reactors. 

The issue of security was top of mind for me when I toured Dominion Energy Virginia’s North Anna Power Station last month. I had the opportunity to pose the kind of questions that members of the public might ask.

I’m not qualified to render judgment on the effectiveness of Dominion’s security efforts, but I can say one thing: Security at the nuclear facility is something the company thinks about around the clock. Utility officials have spent enormous time and effort anticipating and preparing for any scenario you can imagine. Earthquake? Check. Hurricane? Check. Cyber-attack? Check. Armed terrorist attack? Check. Hijacked airplane flying into the nuclear containment dome? Check.

Based on what I learned, I’m not worried about natural disasters or terrorist attacks. The threat of cyber-sabotage continues to unsettle me, but the danger is to the transmission and distribution grid, not to nuclear power plants. Dominion officials assured me — and for a simple reason that I shall explain in due course, I believe them — that their nuclear power plant controls are not vulnerable to a cyber-threat.

If there had never been a Chernobyl or Fukushima, I might not even be asking these questions. As it is, those calamities did occur. We learned that, as thorough as they try to be, nuclear engineers don’t foresee every conceivable contingency. With nation states from Russia and China to Iran and North Korea seeking to penetrate and compromise our infrastructure, we need to keep up our guard. At the same time, we should avoid creating unnecessary alarm. So far, I’ve seen nothing that makes me lose any sleep.

Earthquakes, hurricanes, and aircraft strikes

On August 23 at 1:51:04 p.m., the control room of the North Anna Power Station began to shake, as if it were sitting on a giant vibrating phone, recalls Lee Baron, who worked in the control room then and now runs the company’s simulation center. Lights on the control board began blinking. Alarms emitted shrill beeping noises. Tiles fell from the ceiling. Outside the facility, some electric transformers cracked. 

The earthquake, the worst trembler to shake the East Coast in at least a century, exceeded what the power station had been designed for, says Baron, but the facility “shrugged it off.” Following Electric Power Research Institute guidelines, the operators powered down the plant without incident. After minor repairs and two months of intensive inspections, the nuclear station was up and running again.

Media attention focused on the fact that the North Anna station was located on an ancient geologic fault line. The fact that the epicenter of the earthquake was just a few miles away under the town of Mineral led many to conflate the two. But, the two fault lines were unrelated, says Richard Zuercher, manager-nuclear fleet communications for Dominion.

Indeed, as College of William & Mary geologist Chuck Bailey concluded in a 2012 review of maps, photos, and reports, the fault underlying the North Anna Power Station had last been active about 200 million years ago. On the other hand, as the Mineral earthquake demonstrated, the geologic plate upon which the East Coast rests was more active than previously supposed.

Unlike some earthquakes that have a highly localized impact that creates heavy damage, Zuercher says, the Mineral shaker, which registered 5.8 on the Richter scale, diffused its energy and caused light damage over a vast area. The quake was felt as far away as Atlanta and New Brunswick. Virginia does not face a California-like threat of a massive killer quake.

Hurricanes and tornadoes are another theoretical threat. The concern is that wind might pick up a cars or telephone poles and hurl them like projectiles. The nuclear reactors, a third of which are underground, are protected by massive containment domes made of compressed concrete lined by steel plate and reinforced by steel rebar.

The 4 1/2-feet-thick dome wall “is built to take a licking,” says B.E. Standley, the Dominion executive in charge of nuclear power plant safety. “It can survive anything short of an asteroid strike or zombie apocalypse.”  Continue reading

Forgotten Battles, Missing Landmarks


by Cliff Page

On an abnormally warm early Spring day, I took a 150-mile motorcycle ride from Portsmouth to Stony Creek, Va. That’s where my Great Great Grandpa was captured by federal forces in 1864. He rode with the South Carolina 6th Insurgent Calvary (Aka: the Dixie Raiders), which fought in nearly every major engagement in Virginia from 1862 until the surrender.

Before visiting Stony Creek I had no idea of the importance of the place. I presumed that it was just an outlier to the defense of Petersburg. But from talking to some old timers who live there today, I learned that Stony Creek was a critical logistical hub for the Army of Northern Virginia and a focal point of the lengthy siege of Petersburg, the loss of which precipitated General Lee’s calamitous retreat towards Appomattox and the end of the Civil War.

Stony Creek lies to the west of Interstate 95 between Emporia and Petersburg. During the siege of Petersburg between June 1864 and March 1865 nearly all the supplies to the Confederate defenders — including those from Wilmington, N.C., the only Confederate port not blockaded on the East Coast at the time — came up the Petersburg and Weldon (now CSX Railway) into the Stony Creek depot. Goods were offloaded from the trains and put onto wagons and hauled on plank roads through the back woods and swamps to Petersburg, 25 miles to the north.

During the siege of Petersburg, a largely static affair, a series of engagements were fought over Stony Creek. In June, the Confederates turned back a Yankee cavalry foray, but not until the raiders had torn up 60 miles of railroad track. General Grant ordered another raid in December, which the defenders likewise repulsed. But the attack disrupted the vital supply line, doubling the distance supply wagons had to travel and exacerbating the Army of Northern Virginia’s shortages of ammunition, food, and medical supplies.

By March it was clear that Lee could no longer hold on. After a series of reversals, he evacuated Petersburg. In full retreat, the Army of Northern Virginia would fight only a couple more engagements before being forced to capitulate at Appomattox Court House on April 3rd.

I don’t know exactly where my Great Great Grandpa Randolph Page was captured at Stoney Creek, or where he was imprisoned. Many Confederate Calvary POWs were incarcerated on the Eastern Shore. But one thing is recorded – he was given ten dollars in gold, at discharge and walked on foot back to Landrum, S.C. Upon arriving at his log cabin and farm, he stripped off his lice-infested uniform, burned it, shaved off his hair and scrubbed his body down with lye soap in the creek. Thereafter he returned to the plow and put the war behind him.

Today Stony Creek is a little rural community in sad shape, and hanging by a thread. Cars and trucks whiz by on I-95 and and pay no mind. The BBQ pit and little antique shop, once easily accessible on old I-301, are off the beaten track. The billboard next to the BBQ displays the rust of over 50 years, as worn sign paper and gauze wisp gently in the breeze like curtains to the past.

The town’s history is being forgotten as those who remember get older. But the rail that brought in supplies and ammunition is still there, as are the winding roads where muleskinners ported supplies from the depot to Petersburg. A cannon abandoned in the swamp rests on the main street. The one-room Sappony Baptist church — where Confederate infantrymen fought off a company of Yankees before friendly cavalry ran them off — still stands. The church bears the scars from where a Yankee cannon ball punched through the front wall and a bullet hit the church Bible. Today, the wall’s hole is patched with tin and the church is sided with vinyl.

A wealth of knowledge about the Civil War resides in small communities like Stony Creek, but it is dying. I talked to the locals and encouraged them to print a flyer with a brief history of Stony Creek and a map showing the battlefields and the plank road routes that channeled supplies to Lee’s defenses. Virginians in communities across the state should do likewise, and put up materials on a common statewide History and Tourism website. Tourists could download and print these maps and history as guides or view them on their smart phones.

This would be a great project for the Sons of Confederate Veterans, indeed a project in which all Southern states could participate. Creating a platform for small communities to tell their story of Virginia’s defense and the Confederate cause would lift local spirits and stimulate tourism. History could be brought to life for a new generation, as folks discover the little places, now forgotten, that played significant roles in history.

Stony Creek is a great day trip on a motorcycle or an open convertible on a warm sunny day. I encourage Virginians to visit the place and learn about the history of which we all are apart.

Cliff Page, a sculptor, lives and maintains his studio in Portsmouth. 

The Northam Administration’s Top Budget Priorities: Medicaid, Rainy Day Fund

Secretary of Finance Aubrey Layne

The biggest obstacle to enacting a state budget is the disagreement between the Senate and the House of Delegates over Medicaid expansion. But even if legislators could resolve their Medicaid differences tomorrow, Finance Secretary Aubrey Layne said earlier today, they still would have to resolve a $400 million gap over other programs.

The second largest funding disagreement revolves around higher education, Layne told members of the State Council of Higher Education for Virginia at a monthly meeting at Christopher Newport University.

According to data SCHEV distributed at the council meeting, the House Appropriations Committee has budgeted $218.8 million in additional dollars for education over the biennial budget between 2018 and 2020, while the Senate Finance Committee has allocated only $94.7 million in new dollars. Most of the gap can be traced to differences in three areas: funding for the Cyber X cyber-security education initiative, faculty pay raises, and financial aid.

Layne voiced no preference for either the House or Senate higher-ed budgets, but did say that Governor Ralph Northam’s two top priorities are funding the Medicaid expansion and setting aside reserves to bolster Virginia’s precarious AAA bond rating.

While the budget outlook for the current fiscal year, 2017-18, is improving, Layne said he is not willing to bridge the funding gap by assuming stronger revenues for 2018-19. Year-to-date personal income tax revenues are up about 6% this year, considerably ahead of the forecast 3.5%. The federal tax cuts appear to be having a stimulative effect on income. December saw a $200 million revenue jump, but he doesn’t know if that reflects a surge in income or a burst of early payments to take advantage of the state-and-local tax deduction before the new tax law eliminates it.

Other signs are favorable — revenue from the sales tax is up, as is the recordation tax on home sales — but Northam wants to dedicate any surplus funds to building up the state’s rainy-day fund.

The Standard & Poor’s rating agency has given Virginia a negative outlook on its AAA bond rating. “They don’t like to see one-time revenues pay for ongoing expenses,” said Layne. Also, he said, “they like to see bigger financial reserves” — 3% to 8% of revenues. The budget introduced by former Governor Terry McAuliffe put an additional $270 million into the reserve for a more than $100 billion two-year budget. The House budget would do less; the Senate budget would do more than the House’s.

Bottom line: However the economy performs for the rest of the fiscal year, there won’t be any loose purse strings to paper over the differences between the House and Senate versions of the budget.

In other remarks, Layne opined on his philosophical approach to the budget. A big concept in the private sector is “fiduciary responsibility,” said Layne, who had been president of Virginia Beach-based Great Atlantic Management before joining the McAuliffe administration four years ago as secretary of transportation. If he violated the highest standards of care for a client, he could get sued or fired. He applies the concept of fiduciary to his job working for state government. His duty is to the citizens of Virginia.

Virginia citizens are paying federal taxes to pay for the Medicaid expansion enabled by the Affordable Care Act. To live up to his fiduciary responsibility and get that money back, Layne supports expanding Medicaid as allowed by the law. One argument he’s heard against expansion is that the federal government can’t afford the program, it’s going bankrupt. To the contrary, said Layne, the federal share of Medicaid expansion is paid by taxes enacted by the Affordable Care Act. It’s not deficit spending. A second argument he’s heard is that the feds can’t be trusted not to renege on its payments. But that possibility is covered by a codicil in the budget that says if the feds back out, the state can back out of the Medicaid expansion, too.

Layne suggested that there is a serious mismatch between Virginia’s tax base and its spending priorities.

Drawing upon his experience as transportation secretary, he noted that the Commonwealth collects roughly $2.5 billion a year in revenue for transportation. Of that sum, only 20% or so pays for new construction; the rest goes to maintenance and operations. The reliance upon the gasoline tax has eroded the transportation revenue stream. As cars get better gas mileage — and as electric vehicles phase out the internal combustion engines — gasoline consumption and revenues decline. In theory, Virginia could switch to a Vehicle Miles Traveled tax, a true user fee. But that creates privacy concerns. To raise revenue, the state has resorted instead to increasing tolls. Nobody likes tolls, but they are a user fee, and they do expose the true costs of transportation.

Once upon a time, transportation funding did not compete with General Fund priorities. said Layne. Now transportation gets a share of the state sales tax, which puts pressure on priorities like education and health care, both of which are funded through General Fund revenues like the sales and income taxes.

What’s the answer? Update the tax structure, which is based upon an 20th-century industrial economy, to one that is based upon a 21st-century knowledge economy. Internet sales are not taxed — although that may change, depending upon an upcoming U.S. Supreme Court ruling. Services are not taxed. Perhaps they should be.

At a broader level, Layne said that Virginia needs to adopt a rigorous approach to formulating the state budget. What kind of services do we need?  What money do we need to fund those services? And where does that money come from? “That’s the kind of analysis that not just us, but the country, will have to go through.”

After 400 Years, the Pamunkeys Shall Rise Again

Pamunkey Chief Robert Gray. Photo credit: WTJU

Wow, ever since winning federal recognition as an Indian tribe, the Pamunkey Indians are on a tear. Last week I  highlighted PamunkeyNet, a proposal to bring broadband Internet service to rural counties in the Chesapeake Bay region. Now, we find out that the Pamunkeys are thinking bigger… way bigger.

According to Daily Press, the Pamunkey Indian Tribe is looking for land to build what it envisions as a $700 million gaming center that features shows, a spa and a hotel. The project would employ some 4,000 full-time workers and would have a $200 million payroll. Not bad when you consider that the Pamunkeys number only 380 members!

It’s hard to know what to make of all this activity. Since securing their federal recognition, the Pamunkeys have been conducting negotiations with investor groups that specialize in helping Indian tribes launch similar ventures. The value proposition of Indian tribes is their ability to access federal funds and their exemption from many state and local restrictions.

I’ll be the first to admit to an anti-Pamunkey bias, dating back to 1675 and the original Bacon’s Rebellion. Nathaniel Bacon led a movement comprised mainly of poor farmers and white and black former indentured servants against the corrupt regime of Governor Sir William Berkeley. The Pamunkeys sided with Berkeley. The frontier was notorious for tit-for-tat raids and retaliations between English settlers and Indian tribes, and it is fashionable among historians now to accuse Bacon’s forces of making indiscriminate attacks on innocent Indians, including the Pamunkey. Bah! Politically correct thinking infects everything! I reject it. Cross Nathaniel Bacon for whatever reason, and you’re on my black list.

I bear modern-day Pamunkeys no ill will for the deeds of their misguided ancestors. But I find myself astonished by the sudden good fortune about to be showered upon a handful of tribesmen by virtue of their ancient lineage. Whether they succeed in building a casino or not, it seems they have hit the proverbial jackpot.

Judging by the Daily Press article, the Pamunkey tribe has an enlightened attitude. It is using its privileged status to help the broader community by expanding senior housing, rural broadband services, and job creation.

“We don’t live in teepees; we’re just your neighbors,” said Chief Robert Gray. “We’ve got jobs in Richmond, Mechanicsville, Williamsburg. We’re retirees, kids … right now we can use HUD (U.S. Housing and Urban Development) funds, the Indian Health Service. But wouldn’t it be great if we paid for our own health care — more self-sufficiency, more self government.”

The Pamunkeys sound like good neighbors. And I respect the fact that they have managed to maintain a distinct identity for hundreds of years. But in the irony of ironies, they are adopting a strategy that’s become as American as mom and apple pie — working the leviathan state for privileges and favors. They’re joining the ranks of the rent seekers. What a shame.

21st Century Wealth Creation: block.one

Dan Larimer. Photo credit: Roanoke Times

Nine years ago Dan Larimer was broke, living with his parents, driving a 2001 Nissan Altima, and recovering from a messy divorce. Today Forbes magazine estimates his net worth at $600 million. The source of the 35-year-old Virginia Tech graduate’s fortune? Crypto-currency.

As the Roanoke Times‘ Jacob Dimmit tells the story, when Larimer was down and out, he managed to scrape up $20 to purchase 400 bitcoins. Today, those coins are worth about $4 million.

But a fortuitous purchase of bitcoin isn’t what made him one of Virginia’s wealthiest people. Fascinated by crypto-currencies, Larimer began creating his own. He launched his first crypto-currency, BitShares, in 2014. The value of all BitShares now exceeds $400 million. Then he launched Steemit, the first social network to operate on a blockchain. That currency now has a market cap of $600 million.

Now Larimer is working on his latest and greatest project, block.one, which he hopes will outdo bitcoin. Block.one’s coin, EOS, already ranks as the ninth largest cryptocurrency by market value, worth $4 billion. And he’s barely gotten started.

Block.one is headquartered in the Cayman Islands to avoid government taxes and oversight, but the engineering office is in Blacksburg. The company is self-funding, selling a digital token that operates similarly to bitcoin. The plan is to develop software and applications on top of the blockchain technology upon which bitcoin and other crypto-currencies are based.

As the Roanoke Times describes it: “Block.one will create software that it releases into the public for free. Developers will use those tools to create their own applications that run on their own blockchains, much like the way Bill Gates and Microsoft created the Windows operating system for all sorts of personal computers.” It’s not clear from the article how Block.one is supposed to make a profit, but, hey, there’s a lot I don’t get about the technology.

“Chronicling wealth is a big part of what we do,” Jeff Kauflin, co-author of the Forbes Richest People in Crypto-Currency list, told the Roanoke Times. “Crypto is a legitimate asset class now. There’s a lot of wealth that’s been created based on it, hundreds of billions. We at Forbes think it should be treated as a legitimate asset class.”

Clearly, Larimer is a genius. With the encouragement of his father, a defense contractor, he began writing software on a Macintosh II as a fifth-grader. When he exhausted all of the Advance Placement computer science classes during his junior year in high school, he just taught himself. When he started at Virginia Tech, he tested out of three semesters of coursework.

A turn towards libertarian thinking. In Blacksburg, Larimer got married, had children, and then got divorced. He and his ex crafted a deal under arbitration. The courts overturned parts of the deal, leaving him feel cheated. “That was my first experience with the government not respecting arbitration,” he said said. “I view violence as a shortcut to governance. So I made it my mission in life to find free market solutions to securing life, liberty, property and justice for all.”

Larimer said he believes cryptocurrencies, and the blockchain technology that power them, can provide fairer solutions to all sorts of societal woes. Currency is the beginning, but Larimer said the technology has the potential to reach much further.

No one company or government controls the software, so authority is decentralized. It’s based on computer algorithms, so the subjectivity is removed from the equation. A contract agreed to by two parties, whether it’s the transfer of a bitcoin or a separation agreement, is set in stone and cannot be relitigated.

“Right now in the current system, I have no way to know if that’s your car,” Larimer said. “I have to go ask the government. And if there’s a dispute between us, I have to go ask the government. The government will decide and they may or may not honor our contract.”

In the future, Larimer imagines, vehicle registrations will be stored in a blockchain, or a public ledger containing the information on every vehicle transaction to ever occur.

A block will be created when a vehicle rolls off the assembly line, then another when it’s sold at a dealership. When that owner decides to sell the car on Craigslist, they accept payment and in exchange add another block transferring ownership yet again.

If there’s an argument years later about who owns the vehicle, anyone can look back at the public ledger, called the blockchain, track the chain of blocks back to the manufacturer and determine the rightful owner.

This would be a vehicle registration system that would give unprecedented transparency, where deals could never be undone and the government would be completely uninvolved.

Bacon’s bottom line: We live in strange and unsettled times. I cannot begin to fathom how information-age alchemists can conjure up billions of dollars from the ether through the creation of crypto-currencies. Such digital prestidigitation seems to nullify all the axioms and maxims for slow-and-steady wealth accumulation that I grew up with. I can’t begin to imagine the creative destruction that crypto-currencies and blockchain will unleash, and I have no ability to augur who the winners and losers will be, much less how to preserve the modest wealth that I have accumulated. If you’re on the wealth-creating end, it must be an exhilarating time. If you’re on the sidelines, it’s most disconcerting.

I will say this: If crypto-currencies and blockchains are going to transform the world, I’d like to see one of the epicenters of change arising in Blacksburg. If Block.one turns out to be the next Microsoft, Apple, Google, or Amazon, I’m glad that Virginians will see some benefit from it.

Scientific Knowledge vs Social Constructionism

C.E. Larson

C.E. Larson is a professor of mathematics and applied mathematics at Virginia Commonwealth University, and he’s a big believer in the scientific method as a way of thinking and accumulating knowledge. He’s also worried that a proposed new General Education curriculum winding its way through the VCU bureaucracy is so loaded with trendy, anti-scientific thought that it will make the university “a public and national embarrassment.”

“The proposed curriculum not only appears to be unrigorous and unfocused, but the main problem is that it is implicitly anti-science, at a time when we need to produce graduates — and citizens — who are critical thinkers, and can think like scientists, no matter what discipline they study,” he writes in the Richmond Times-Dispatch today.

VCU’s current curriculum is conventional, imposing minimum requirements for quantitative literacy, research & academic writing, humanities/fine arts, social/behavioral sciences, and natural physical sciences. The proposed curriculum uses a very different framework for organizing the curriculum: foundations of learning (writing and critical analysis); diversities in the human experience; creativity, innovation, and aesthetic inquiry; global perspectives; and scientific & logical reasoning.

Given the requirement for scientific & logical reasoning, one might be forgiven for wondering what Larson is worried about. It appears that he was triggered by some of the nomenclature in the proposed curriculum.

There is only space here to mention a single offending guideline from VCU’s proposed General Education curriculum: “Recognize how knowledge is constructed differently in various communities.” Knowledge of course is knowledge. But there are fashions in academia that suggest that the most important kinds of knowledge are somehow not universal, and that there is no “truth” to scientific laws.

One of these trends, alluded to in this curriculum guideline, is “social constructivism” or the “social construction of knowledge.” The main idea here seems to be that because people discover scientific laws, the discoveries must be somehow dependent on the backgrounds (cultural, political, etc.) of the scientists who made them. …

A better guideline here would be to recognize how knowledge is universal, and acquired only slowly over time with great effort, by serious and thoughtful researchers across the planet.

A reading of the proposed curriculum reveals other indicators of leftist/progressive thinking:

  • “Understand and evaluate patterns and processes affecting social organization and distributions of power and resources” — again, it’s all about the power.
  • “Examine patterns of inclusion and exclusion, and other forms of social grouping.” The emphasis on inclusion and exclusion, of course, is a leftist preoccupation.

At the risk of getting all philosophical on you, comrade reader, I do believe there is a modicum of truth to the theory of the social construction of knowledge. Knowledge is socially constructed — what else could it be? Embedded in our genome? Further, it is fair to say that there is a powerful tendency for people to construct modes of thought that support and/or justify their own culture, religion, class, nationality, race, ethnicity, affinity group or interest group. Indeed, this is a universal characteristic of human behavior.

However, that’s not to say that all knowledge is socially constructed. Some knowledge comes closer to reflecting reality than other knowledge. Some approaches to acquiring knowledge allow us to send astronauts to the moon and develop cures for cancer that other approaches cannot. Invariably the approaches that advance technology are based upon empiricism and the scientific method. The scientific method — creating falsifiable hypotheses and testing those hypotheses — is, like everything human, less than perfect and subject to bias, blindness and corruption. But over the long haul, it has worked better than any other approach to acquiring knowledge, and the proof, visible in technological marvels, is there for all to see.

Applying the scientific method to the study of human behavior — psychology, sociology, economics, politics, etc. — is more problematic than the physical sciences because (a) human behavior is so extraordinarily complex and influenced by such a vast number of variables, and (b) people have a greater stake in the outcome, which, therefore, may bias the process of scientific inquiry. (Thus, for example, we get supposedly scientific studies finding that liberals have higher IQs than conservatives.)

While the “scientific” process of acquiring knowledge about human affairs is riddled with pitfalls, it is superior to the process that says we all believe what we want to believe, that knowledge is purely a construct of power, and he (or she, or they, or ze) with the most power imposes his language, mental constructs, and cultural/political views on others.

It’s one thing for individual professors to adopt the constructivist paradigm. It’s another thing for a university administration to embed that paradigm within the curriculum. Is that what VCU’s proposed curriculum seeks to do? It’s hard to tell. Is studying “diversities in human experience” a means to entrench leftist/progressive thought? Given the temper of higher education today, I do share Larson’s concerns. But the curriculum also gives emphasis to “scientific & logical reasoning.” I hate to pre-judge the outcome.

Reynolds Wins Customer Aggregation Petition

SCC headquarters

The State Corporation Commission has issued a decision expanding the right of large customers to bypass the monopoly franchises of Virginia’s electric utilities and purchase electricity from competitive suppliers.

While the General Assembly was embroiled in debate over grid modernization and the rollback of the electric rate freeze, the SCC approved the first ever “customer aggregation” petition. Reynolds Group Holdings Inc. now has permission to aggregate the demand of three of its subsidiaries at six locations in Virginia served by Dominion Electric Virginia for the purpose of purchasing electricity from someone other than Dominion.

Reynolds, based in Auckland, New Zealand, owns several packaging enterprises associated with the old Reynolds Metals, formerly headquartered in Richmond. According to the SCC ruling, the aggregated peak electric demand of Reynolds’ Virginia operations was 10.12 megawatts, representing approximately 0.06% of Dominion’s system peak of 17,000 megawatts. The impact on Dominion, which projects peak demand growth of 1.3% over the next 15 years, was de minimis.

It was not clear from the ruling whom Reynolds intends to buy its electricity from. However, Calpine Energy Solutions and Collegiate Clean Energy filed comments in support of the petition. California-based Calpine supplies natural gas, power and associated energy and risk management services to customers throughout the United States. Wilmington, Del.-based Collegiate supplies 100% clean energy solutions to universities and businesses.

Will Reisinger with the GreeneHurlocker law firm explains the significance of the ruling in a blog post:

[The] law allows large customers with annual demands over 5 MW to purchase generation from competitive suppliers. Importantly, the law also allows a group of customers to “aggregate” their demands in order to reach the 5 MW threshold. The statute treats large customers with multiple meter locations as different customers but allows them to aggregate to meet the 5 MW threshold. Once aggregated, the group will be treated as a “single, individual customer” under the law. Before allowing an aggregation, however, the Commission must find that the requested aggregation would be “consistent with the public interest.”

SCC Case No. PUR-2017-00109 was the first test of this statutory provision – that is, the first time a group of customers sought to combine their demands in order to reach the 5 MW threshold. In this case, Reynolds Group Holdings, Inc. (“Reynolds”), a metals and packaging manufacturer, petitioned the SCC for approval to aggregate six of its retail accounts in Dominion’s service territory.

Dominion and Appalachian Power Company (“APCo”) intervened in the case and opposed the petition. Dominion argued that allowing customers to aggregate their demand “would unreasonably expand the scope of retail access [and would] have the potential effect of eroding a significant portion of the utility’s jurisdictional customer base.” Dominion also suggested that the General Assembly – despite authorizing customer shopping and aggregation – intended to allow retail choice “only in limited circumstances.”

But the SCC, relying on the plain language of Va. Code § 56-577 A 4, rejected Dominion’s and APCo’s arguments and approved the petition. Dominion and APCo have until March 23, 2018, to appeal the decision to the Virginia Supreme Court.

No word yet from Reynolds, Calpine or Collegiate about what exactly they have planned.

Yet Another Path to Rural Broadband: Other Peoples’ Money

The Pamunkey Indian Tribe… soon delivering broadband Internet from a wireless tower near you.

Speaking of bringing broadband Internet to rural Virginia (see previous post)… PamunkeyNet, a business entity of the Pamunkey Indian Tribe, has received approval from the GO Virginia State Board to develop a plan to bring broadband to Gloucester, Mathews, Middlesex and other rural counties along the Chesapeake Bay.

The newly awarded federal designation of the Pumunkeys as an officially recognized Indian tribe is key to the venture. According to a GO-Virginia document, the project would unfold over three years. GO-Virginia, a state-funded economic development initiative, would provide backing for two years. The Pamunkey-owned project would:

  • Create a network of existing and new wireless towers throughout the Middle Peninsula and George Washington region that will have a high-performance backbone between towers and local access radios on each tower to provide affordable business, residential, and institutional broadband Internet service, and will provide Gigbit fiber services on the Pamunkey reservation.
  • Create a fiber-based Technology Corridor on Route 33 between Rappahannock Community College, the planned Telework Center, and the Middle Peninsula Regional Airport.
  • Design for linkage with Hampton Roads, specifically for VIMS and Rappahannock Community College, and anticipate the benefits of linkages to the south with transoceanic destinations from the MAREA landing point, as well as to the north at Ashburn.

Key to making this happen is Pamunkey access to federal funds — “the sole federally designated tribe in Virginia and a conduit to currently untapped federal resources.”

The project also would involve the Middle Peninsula Planning District Commission, the Rappahannock and Germanna community colleges, ten localities, and two electric co-ops.

Bacon’s bottom line: I’ve just finished reading Nassim Nicholas Taleb’s brilliant and confounding new book, “Skin in the Game: Hidden Asymmetries in Daily Life.” Taleb doesn’t have much use for movers, shakers, and pundits (which would include people like me) who don’t have “skin in the game,” that is, people who, if their analysis proves unfounded, walk away unscathed. One commonly encountered group of skinless gamers is people who play with taxpayers’ money.

If you had to make a prediction, which would you pick to have a greater chance of economic success (that is, recovering the funds invested): Gary Wood’s plan (described in the previous post) for the Central Virginia Electric Cooperative to deliver broadband to its 36,000 customers, or the Pamunkey plan to deliver broadband to a geographic area of comparable size?

I would lay my money on Wood. In a word, Wood has put his ass on the line, and he reports directly to a board of directors, whose members represent the interests of the customer-members of the co-op. If the venture fails, co-op members will take a bath, board members will catch endless flack from their friends and neighbors, and Wood’s career likely will be ruined. I would feel even better if he had some of his own money at stake, but there is a clear line of accountability, and the people involved have a lot to gain or lose. Without knowing Wood personally, I feel reasonably assured that he will do everything within his power to make the project a success.

Conversely, it doesn’t appear that anybody has skin in the game in the Pamunkey deal. There is no indication that the Pamunkeys are putting up any of their own money or that they’ll suffer any loss if the project bombs. Basically, a bunch of bureaucrats are playing with other peoples’ money, and if the project fizzles, there is no discernible impact on any of the participating organizations. Furthermore, participation is so broad and so diffused, there won’t be anyone to hold accountable. The Pamunkeys might tap enough state, federal, and local money to get the broadband service built. But would the project be economical, in the sense of earning back its cost of capital? Who cares? It’s other peoples’ money.

Another Path to Rural Broadband: Electric Co-ops

Service territories of Virginia electric utilities. The CVEC territory is shown in bright blue in the center of the state. (Click for larger image.)

The Central Virginia Electric Cooperative has been delivering electricity to the inhabitants of 14 Central Virginia localities for 80 years. Now it’s planning to provide high-bandwidth Internet connections. The company has announced a plan to invest $11o million to connect all 36,000 co-op members.

Co-op members will be able to purchase 100 megabits per second (mbps) access for $49.99 a month or 1 gigabit per second (gbps) for $79.99 a month, reports the Fluvanna Review.

Keeping the pricing reasonable was important to CVEC President Gary Wood. “I didn’t want this to become a premium service or a luxury service,” he says. Continues the Rivanna Review:

Wood said the project is anticipated to lose money for the first seven years and reach the break-even point in about 11. He admits that “give me $100 million and in seven years, I’ll start bringing you your profits,” hasn’t been the easiest argument to sell, but he believes it can be done with a combination of  loans, grants, state and federal funding and tax rebates.

CVEC is also asking for financial support from each of the counties in its service area.

For a for-profit business, eleven years would be a slow payback. But for an electric co-op, owned by its customers, that might seem like a reasonable proposition.

One objection, I would expect, would revolve around opportunity cost. By taking on a financial obligation of this size, the co-op might be limiting its ability to pursue other projects such as, say, grid modernization or solar energy. Another objection would be risk. What if rural residents aren’t willing to pay $50 to $80 per month for broadband access? Could disappointing revenues put the co-op in financial jeopardy?

But let’s face it, no one else is likely to want to deliver broadband to the rural residents of Central Virginia. This seems like a project that is custom-made for CVEC, and it could provide a model for other co-ops, who cover roughly a third of the geographic expanse of the state.