Monthly Archives: March 2018

Why Offshore Drilling Is Good for Virginia

By Mark Greene

According to a recent study, safely tapping Virginia’s offshore natural gas and oil reserves could provide nearly $1.8 billion of private investment annually in the Commonwealth. While many are quick to judge this initiative, all of the facts should first be considered.

For example, federal revenue sharing could help transform the state economy by sending billions in royalties, rentals and fees to our state coffers. By putting revenue-sharing programs in place -– like those already working for the states of Alabama, Louisiana, Mississippi and Texas -–Virginia could benefit from offshore energy development to the tune of $235 million per year, according to the study. And that’s in addition to industry spending and high-paying jobs created that would help boost our economy.

“So, what’s trying to stop a reasonable exploration of what job creating resources might be available off our coast?,” asks former delegate Chris Saxman in a Roanoke Times editorial. “Fear. Fear accelerates order to disorder and hinders economic growth that will pay for the promises we have made.” He goes on: “Done properly, offshore exploration can create thousands of jobs that pay an average over $100,000 a year while providing tax revenue to also pay our hard working public employees like teachers, police, fire, and rescue personnel or we can dedicate that revenue to fixing interstates like I-81.”

To elaborate on Saxman’s point about the kinds of economic benefits offshore access could bring – here’s the picture of the Virginia projections if we were to develop oil and natural gas off of our coast, recently released by API:

Virginia

  • $2.1 billion in federal revenue sharing over the forecast, reaching $236 million per year at the end of the forecast.
  • $19 billion in industry spending over the forecast, reaching $1.8 billion by the end of the forecast.
  • $22.3 billion added to state GDP over the forecast.
  • 24,664 jobs gained by the end of the forecast.

Numbers likes these illustrate big economic opportunity for the whole state if we are included in a new federal offshore leasing plan now under development. Despite any kneejerk reactions that may have taken place initially, economic benefits of this size should compel policymakers to consider the needs of entire states when discussing offshore development.

At a House hearing last fall, former U.S. Sen. Mary Landrieu of Louisiana said natural gas and oil industry employment long has benefited her state. “We have men and women graduating from high school that are going to work in the oilfield and they don’t make minimum wage,” Landrieu said. ”They can make $80, $90, $100,000 a year. And that means a lot to their families, and it sends a lot of kids to college from south Louisiana.”

Offshore energy would be privately financed – reflected in the industry spending numbers above. That’s spending throughout state economies by natural gas and oil companies and their employees. It’s a boost to economic growth for portions of our state, like Southwest Virginia, that haven’t seen much growth for years.

Offshore energy is compatible with other ocean uses, including the military. It is safer than it has ever been and is always improving, thanks to technology, industry standards, safety management systems and employee training. No human enterprise is without risk, but industry’s premium on technology and safety – to protect its workers and the environment – properly manages this risk while producing energy and national security benefits for today and decades into the future.

“Interior’s offshore proposal is a critical first step to advancing a strong energy future for Virginia,” said Miles Morin of the Virginia Petroleum Council. “Not only can offshore energy exploration and development help provide reliable and affordable energy for Virginia’s consumers, but it can also be the cornerstone for economic growth and investments in our state.”

This is American energy that should be safely harnessed to benefit all Virginians – both on the coast and all across the Commonwealth.

Mark Green is editor of Energy Tomorrow, a publication of the American Petroleum Institute.

Heads I Win, Tails You Lose

This will be one of those blog posts where many readers will ignore the substance of my arguments and go straight for the jugular — Dominion Energy Virginia sponsors this blog, I’m a shill for Dominion, and, therefore, anything and everything I say can be discounted without further thought. If you’re one of those people, I know I won’t persuade you. But please, if you object to my conclusion, don’t settle for the cheap ad hominem shot. Explain to me why I’m wrong.

This post was triggered by a Washington Post op-ed by Del. Mark Keam, D-Fairfax, titled, “Why I’m Breaking Up with Dominion.” Keam wrote:

In 2017, President Trump made it clear there would be no Clean Power Plan, which put Dominion in a bind. Dominion couldn’t justify continuing the rate freeze when the reason it cited no longer existed and it held nearly a billion dollars of potential customer refunds.

On the other hand, as Virginia’s most powerful political donor, Dominion couldn’t admit its mistake and simply return to pre-2015 status. So, Dominion launched an all-out lobbying campaign to push for a different result.

First some background: In June 2014, the Obama administration began implementing its Clean Power Plan. The State Corporation Commission (SCC) staff estimated that the plan would cost Dominion between $5.5 billion and $6 billion for Dominion to shut down coal plants and replace them with power from other fuel sources. Environmental groups suggested that the cost would be much less. But nobody knew for sure, and nobody possibly could know until the Commonwealth adopted a definitive methodology for calculating CO2 goals to be attained. When the General Assembly convened in January 2015, uncertainty reigned.

A deal was struck to freeze base electric rates through 2022 (while continuing to allow the SCC to adjust rates for fluctuations in the cost of fuel and pay for major capital projects). The purpose was to guarantee rate stability for electricity customers. Whatever the outcome for Dominion and Appalachian Power, customers wouldn’t be subjected to higher base rates. Dominion and Apco absorbed the risk. They might make higher profits if the costs were lower than feared, but they might make lower profits if worst-case cost scenarios panned out.

In November 2016 something happened that no one anticipated — Donald Trump won the presidential election, and he effectively spiked the Clean Power Plan.

But what if Hillary Clinton had won, as virtually all informed political opinion expected? It’s no stretch to think that the Environmental Protection Agency and the McAuliffe administration would have continued implementing the Clean Power Plan. We cannot know which of the regulatory options the administration would have chosen — setting CO2 emission targets based on mass-based limits (or total tons emitted) or rate-based limits (CO2 emitted per unit of electricity) — but we can safely assume that the new regulatory framework would have been more costly than doing nothing at all.

Continuing our counter-factual scenario, let’s say the Clean Power Plan framework adopted by Virginia would cost the $5.5 billion to $6 billion postulated by the SCC, and that Dominion had to eat a billion dollars or two in write-offs when it shut down its coal-fired power plants. Now let’s say Dominion came to the General Assembly, saying, sniff, sniff, poor us, these regulations are ruinous, could you please bail us out? What answer would Keam and others of like mind have given? They would have said, “Not a snowball’s chance in hell! You took yer chances and you lost. Now beat it!” And rightfully so.

Of course, that’s not the way things turned out. Dominion lucked out. Trump won the election and he canceled the Clean Power Plan. By January of 2018, Dominion was accumulating earnings way above its normally allowed rate of return (although a major weather event or a regulatory order to pay of billions of dollars to clean up coal ash ponds could have negated those profits).

Inevitably, a hew and cry was raised that Dominion was making out like a bandit by pocketing huge excess profits. Dominion was on track to make a lot of money, all right, but not like a bandit. More like a poker player. Dominion didn’t steal anything — but it did win the bet.

A lot of politicians and consumer advocates couldn’t see the difference. And, politicians being politicians, they ignored the risk that Dominion absorbed back in 2015 and clamored for a rollback of the freeze. The game they were playing can be described forthrightly as, “Heads I win, tails you lose.”

When it became clear in the November 2017 elections that voters largely agreed with the anti-Dominion politicians, nearly obliterating the Republicans’ hefty majority in the House of Delegates, Dominion saw the writing on the wall. The utility seized the initiative with its proposal to end the freeze on its own terms — by reinvesting over-earnings into a massive grid-modernization plan. Politically, the ploy was brilliant. Dominion cut a deal with the new Northam administration, environmental groups, independent solar producers, and other constituencies, leaving Keam and his buddies to eat dust. I understand why the delegate is so sore.

The resulting Grid Transformation and Security Act may or may not be a good piece of legislation. I haven’t delved deeply enough into the details to conclude whether it will be harmful or beneficial to rate payers. We can be reasonably assured that it will be beneficial to Dominion, or the company would not have gone along with it. But if I were a senior Dominion executive, I’d be very wary of cutting a deal like the 2015 rate freeze ever again. Getting sucked into a heads-you-win, tails-I-lose political proposition is no way to run a business.

Pony Up, D.C. Or Else!

Uh, oh, the Metro funding deal isn’t sealed yet. The Washington, D.C., city council could be the spoiler. While Mayor Muriel E. Bowser has asked council to back a $178.5 million annual increase in funding for the commuter rail system to go along with $154 million from Virginia and $150 from Maryland, a council faction by Chairman Phil Mendelson is balking.

Reports the Washington Post:

Mendelson (D) and five other council members sent Bowser a letter late Wednesday saying the city should give Metro only $167 million a year. The letter also says the District should contribute no more than Virginia and Maryland, contrary to the Virginia plan that stipulates each jurisdiction make a proportional contribution based on a funding formula that takes into account things such as ridership, population and number of Metro stations. …

Repeating arguments made by city officials in the past, Mendelson and the council members said that formula is unfair to the city, partly because the District has a smaller population than the Virginia and Maryland suburbs served by Metro.

But, as the Post points out, the District has 40 Metro stations, compared to 26 in Maryland and 25 in Virginia.

Furthermore, I’d add, the reason Metro finances are a wreck is that D.C. representatives on the Washington Metropolitan Area Transit Authority (WMATA) board have insisted on not increasing fares and have been supportive of labor agreements that have run up operating costs and built up massive unfunded retirement liabilities. Virginia needs to stick to its guns, and D.C. needs to pony up $178.5 million.

To Someone with No Skin in the Game, Virginia Beach Entertainment District Sounds Great!

Rendering of proposed new Virginia Beach pier. Image credit: Virginian-Pilot

The City of Virginia Beach is creating a special use entertainment district on the beachfront. There are three main components to the plan: a sports center, a redevelopment project, and a new pier. Developers are getting in on the action. One has submitted a proposal for a double-decker pier with retail and restaurants on one level and fishing on another. If the imaginative artist’s rendering is any indication, the project even could include a skywheel.

A  surf park also has been proposed for the project, which has won the backing from the powerful surf shop lobby. Seven surf shops from Wave Riding Vehicles to Pungo Board House and Whalebone Junction have banded together in a first-time-ever show of support for a development project.

But details have yet to be determined, and the city is soliciting input from citizens on what they’d like to see. Public parking? Fishing from the pier? Bicycle parking? Ride share pick-up/drop-off zone? How about a skywheel or a surfing museum? Fishing contests? Fireworks? Music concerts? Dog water station? (Dog water station? What’s that?)

The more the merrier, I say! As a periodic visitor to Virginia Beach, I’m all in favor of the idea. Virginia Beach is getting a little long in the tooth — nothing much new since the erection of the King Neptune statue — and it could use a big new tourist attraction. I’m tired of taking five-hour drives to Emerald Isle, N.C. My summer vacation dollars are definitely up for grabs.

Best of all from my perspective as a Henrico County resident with absolutely no skin in the game, it looks like Virginia Beach is undewriting the development in a big way, which means the citizens of Virginia Beach would be subsidizing my vacation. The city alludes to those subsidies only briefly in its questionnaire asking for citizen input:

The City is considering using Tourism Investment Program funds, made up mostly of tourism-related taxes and fees like hotel taxes, portions of the restaurant taxes and rental fees, to fund the development of two other projects and parking to support the district.

But WVEC Television lays bare the public commitment:

  • The sports center is set to cost $55 million in public funding
  • The old Dome site project is set to cost $37.5 million in public funding, potentially leveraging more than $200 million in private investment
  • Redeveloping the pier on 15th Street is set to cost $21.5 million in public funding, potentially leveraging more than $200 million in private investment
  • Public funds will also go toward parking facilities and improvements to 18th & 19th streets

I won’t be staying in a hotel — I’ll just bunk in at the family place in Sandbridge — so I don’t expect to pay any lodging taxes. As for restaurant taxes, well, I guess I’ll share those with the good citizens of Virginia Beach, who patronize Virginia Beach restaurants more than I ever will. It all sounds good to me!

Localities, Get in Front of the Transportation Revolution

An Amazon delivery drone — requires no additional investment in roads and highways.

After the General Assembly hashed out a deal this weekend providing the Washington Metro system with an additional $154 million per year in state funding, local Prince William County leaders expressed discontent that more funding for Metro means less money for roads and highways.

Lawmakers had to divert roughly $80 million from regional transportation projects administered by the Northern Virginia Transportation Authority to hit that dollar amount, reports Inside NoVa, “perturbing officials in counties without Metro stations.”

“This is hugely problematic to us,” said Vice Chair Marty Nohe, R-Coles, who also serves as chairman of the Northern Virginia Transportation Alliance. “It’s going to be very difficult for us to fund the sort of megaprojects we’re known for if we lose this money.”

My reaction to the road-builder lobby is the same as it is to the mass transit lobby. The United States is in the early stages of a transportation revolution in which Mobility as a Service will challenge traditional transportation modes such as mass transit and single-rider, owner-occupied vehicles. It is entirely foreseeable that time- and route-flexible shared ridership services in cars, vans, and buses will take away market share from route-fixed and schedule-fixed mass transit enterprises. Likewise, Mobility as a Service will be cheaper than car ownership. While affluent households will always want to own their own car, many will find the Mobility-as-a-Service option to be preferable.

Inevitably, we will see changes in driving patterns — changes that we cannot accurately predict. But committing ourselves to spending billions of dollars on road and highway projects on the assumption that the driving patterns of the past 50 years will remain the same over the next 10 years is nothing short of insane.

Prince William County, like every other jurisdiction in Virginia, needs to get in front of the Uber revolution and ascertain what kind of public investments (hopefully modest) will encourage mobility entrepreneurs to introduce new super-flexible shared ridership services to their locality. As a next step, they might explore how to reduce the number of automobile trips by expediting Amazon-like home delivery services. The transportation policy of the future should focus not on building new highway capacity but on reducing the number of trips.

Approving Metro’s Bare-Bones Capital Budget

Over the weekend the General Assembly agreed to give the Washington Metro $154 million a year in permanent new funding on the condition that Maryland and Washington, D.C., make up the balance of $500 million in new funding, reports the Washington Post. Maryland has passed its own $150 million funding bill, and the District will likely approve at least $150 million more.

Let’s assume for a moment that all the details are worked out, that all three jurisdictions come up with $450 million to $500 million a year for Metro, and that Congress adds $150 million a year to what the federal government has been contributing. Does this latest injection of money get the troubled bus and commuter-rail system out of the woods?

Metro has identified $25 billion in capital “needs” over the next 10 years. The bulk of these needs entail SGR (state of good repair) investments of $15.5 billion to maintain existing capital assets necessary for system preservation. The $25 billion figure also includes $7 billion in “new” needs which “address remediation of hazards or crowding on the rail system in core areas,” plus “unallocated” needs that include regular repairs and maintenance and services.

The added $600 million a year from Uncle Sam, the District, and the states will suffice to cover the critical state-of-good-repair needs and nothing else. Here’s what taxpayers will get for their money:

  • Replacing the 1000-series rail cars, installing a new radio system and cellular infrastructure, and replacing track circuits and power cabling where necessary.
  • Replacing power cable insulators on deep tunnels of the Red Line and other lines particularly where water intrusion occurs, which can disrupt service or cause the need for more frequent and costly repairs.
  • Replacing worn components of track and tunnels on all lines, necessary for safety and service delivery.
  • Upgrading the signaling system, which controls the movement and speed of trains, necessary for safe operations and on-time service delivery.

Nothing fancy here. Hopefully, these investments will reverse the deteriorating quality of service that has caused so many riders to desert Metro. But many desired investments will not be made. I have seen no analysis of what that portends for the quality of service.

The proposed FY 2019 budget for Metro includes no fare increases or service reductions. The operating budget assumes that management can limit spending growth to $12 million, or less than one percent “despite cost growth for legacy commitments, mandates and inflation.”

General Manager Paul Wiedefeld acknowledges that there are “substantial and ongoing risks” in the proposed 2019 budget. Foremost among these are ridership uncertainties in response to telework, gas prices, alternative transportation modes; collective bargaining; and unfunded pension and retiree healthcare liabilities.

Bacon’s bottom line: I continue to believe that the emerging Uber-like Mobility-as-a-Service transportation model poses an enormous threat to all existing transportation modes — both the own-it-yourself automobile model and fixed-route mass transit model. In an affluent society, there will always be some people who want to own their own automobiles allowing them to travel when they wish and with whom they wish, so privately owned automobiles will always be with us. But I’m not confident that there will always be people who prefer to ride in fixed-route, fixed-schedule buses and trains instead of flexible-route and flexible-schedule buses, vans, and cars.

I’m pretty sure that Metro, no matter how competently managed, will continue to loser riders, and that it will be coming back to taxpayers with tin cup in hand in another 10 years. If declining ridership doesn’t do the trick, unfunded retirement liabilities will.

No Real Pipeline Story Here, But Read on If You Must

The public relations battle over the Atlantic Coast Pipeline continues unabated even as managing partner Dominion Energy edges closer to beginning construction of the 600-mile project. The latest flap surfaced in the Richmond Times-Dispatch this morning after the State Corporation Commission agreed, over Dominion’s objections, to accept expert testimony by natural gas industry analyst Gregory Lander in a hearing on Dominion’s Integrated Resource Plan.

Lander, who was retained by environmental groups opposed to the ACP, concluded that the pipeline will cost Dominion ratepayers between $1.6 billion and $2.3 billion. That conflicts with Dominion’s estimate, based upon an earlier study by its own consultants, that the pipeline will save rate payers $377 million annually. Dominion’s estimate will be harder to maintain now that the Duke Energy, an ACP partner, has acknowledged that the cost of project has escalated from $5 billion to between $6 and $6.5 billion as the company adjusted its route and incorporated environmental protections to accommodate the demands of landowners and environmentalists. But that cost increase doesn’t come close to accounting for the discrepancy between the two estimates.

The Southern Environmental Law Center trumpeted the SCC decision to accept the Lander study as a big victory. “This is proof positive that Dominion’s pipeline will not cut costs to customers but instead increase our bills,” said SELC attorney Will Cleveland. “It’s further evidence that Dominion’s original promise – that the pipeline would save customers money and spur job growth in the Commonwealth – has disappeared.”

The Times-Dispatch made the Lander testimony the lead of its story. But I’m thinking that reporter Robert Zullo is reading too much into the SCC decision. Sure, Dominion tried to prevent the SCC from considering the Lander study, but SCC proceedings are full of filings and counter filings. It’s what utility lawyers and environmental lawyers are paid to do.

Moreover, it is silly to read into the SCC’s decision to accept expert testimony into the public record an implication that the SCC is prepared to accept that testimony’s main conclusions. As Zullo quoted SCC spokesman Ken Schrad as saying, “the order merely allows the testimony to be part of the record in proceedings on the plan, which the commission determined is ‘reasonable and in the public interest.”

“That’s not saying it’s right, wrong or indifferent,” Schrad said of Landers’ testimony.

As Zullo further reported: “Last year, pipeline opponents urged the SCC to issue an order requiring the Dominion entities to file an application for the approval of the [natural gas contract with the ACP]. The commission dismissed the petition, stating that if the deal creates unreasonable costs, the remedy is to deny the utility the ability to recover them from customers in a fuel proceeding.”

At some point, the ACP will be built and will start supplying gas to Dominion Energy Virginia. Dominion will petition the SCC for a fuel rate adjustment. That rate hearing will be where the rubber meets the road. Dominion will submit its evidence, environmentalist and consumer groups will submit their evidence, all sides will get an opportunity to critique one another, and the SCC judges will weigh the testimony and decide whether a rate adjustment is justified and, if so, how much.

Zullo knows this — indeed he alluded to it in his article. But he’s a reporter like any other, and he hyped the clash between the SELC and Dominion. Otherwise, it looks like, there wouldn’t have been much from the IRP hearing to report.

Spend Less, Invest More, Improve Credit Scores

U.S. Personal Saving Rate since 1960. Too low for all Americans.

The editorial board of the Virginian-Pilot finds it a matter for “concern” that African-Americans are denied mortgage loan applications in the Hampton Roads region at a higher rate than whites. “In Hampton Roads,” writes the Pilot, black applicants during the study’s period — 2015 and 2016 — were 2.4 times more likely to be denied mortgages than white applicants.

As I began reading this editorial, I braced myself for the usual insinuations that the disparity is due to discrimination, white privilege, institutional racism, or whatever. But I was pleasantly surprised. The editorial writers acknowledged that the study by the Center for Investigative Reporting from which they drew their data did not account for the credit scores of borrowers (or loan-to-asset ratios, for that matter). Indeed, they went so far as to aver, “There is no evidence that the gap is a direct result of discrimination.”

Still, they find the disparity troubling, and they suggest that “something more than economic trends might be a factor.” The report should prompt a “serious review” of lending practices to ensure that there’s “no subtle discrimination at play, no policies or actions that could — even unintentionally — lead to racial discrimination.”

I applaud the Pilot editorial writers for breaking free of the simple-minded institutional-racism narrative. But they don’t go nearly far enough. They remain so ensnared by progressive assumptions that they can’t imagine any other explanation for the disparity than a subtle, as-yet-undetected bias — even though, as they acknowledge, mortgage lenders say it wouldn’t make financial sense to deny a loan to any qualified candidate.

I would refer the editorialists to a December 2017 commentary by Alfred Edmond Jr. in Black Enterprise. Edmond addresses a fact, celebrated in other contexts, that African-Americans were estimated in 2016 to wield some $1.2 trillion in consumer buying power. Buying power is not the same as wealth, he cautions.

Addressing other blacks, Edmond writes:

The ability to build wealth depends on the degree we control our spending, so that after we pay income and other taxes, and for necessities such as housing, food, and transportation, we have something left over to not just spend, but to earmark for emergency savings, retirement savings, an investment portfolio, buying real estate (beginning with our own homes), financing businesses, and acquiring other assets.

Right now, while black income has grown rapidly over the past 70 years, our spending has grown even faster, which means we are spending every penny we make and then some (which is the case for most Americans). And what allows us to spend more than we make? Easy access to credit, of course. …

The truth is that money is in our garage, in our homes, and on our bodies, in the form of consumer goods, such as cars, clothes, electronics, and experiences (such as that daily, gourmet coffee-dessert) that we’re convinced we deserve and can’t live without, or even defer long enough to save, rather than borrow at interest, to have. And far too much of our money is going toward interest payments on the debt we took on (much of it via credit cards) to make these purchases.

Blacks can pursue one of two paths, he says:

A poverty-creation lifestyle. Spend more than you make, regardless of income, and borrow, paying interest and fees, to cover the difference. After providing for basic necessities (and often instead of doing so) you spend all of your income on high-priced, low-value, depreciating assets, such as clothes, cars, jewelry, etc.

A wealth-creation lifestyle. Spend less than you make, regardless of income, and save and invest the difference, earning interest, dividends and capital gains. Invest as much as possible in sensibly priced, appreciating assets, such as stocks, bonds, mutual funds, real estate, etc.

What Edmond writes, of course, is true for everyone, not just African-Americans. Personal thrift and saving were long considered virtues in the United States. But with the general disparagement of “bourgeois virtues” and the rise of hyper-consumerism, the willingness to defer gratification has gone out of style. Savings rates in the U.S. are half of what they were in the 1960s, 70s, and 80s. (See the chart atop this post.) For whatever historical or cultural reason — perhaps attributable to past discrimination and a desire to enjoy the material blessings that other Americans take for granted — African-Americans spend more (thus accounting for their punching above their weight in consumer spending), save less, accumulate more debt, and have worse credit scores. Which means they get turned down more frequently when they apply for mortgages.

Rather than engaging in wild goose chases, seeking auras and penumbras of discrimination in the banking industry, society should be encouraging African-Americans to embrace the virtue of thrift. Resources devoted to underwriting deeply flawed and deceptive “investigative” reporting such as the Center for Investigative Reporting study (see my take-down here) would be far better deployed to teaching financial literacy to African-Americans — indeed, to all Americans, for financial illiteracy and irresponsible spending know no ethnic or racial bounds. Meanwhile, the editorial writers of the Virginian-Pilot would be well advised to broaden their reading list. Black Enterprise might be a good place to start.

Yes, Virginia, There Still Is a Libertarian Party

And in other news largely ignored by Virginia media over the weekend… The Libertarian Party of Virginia nominated Matt Waters, an Alexandria fund-raising consultant, as its candidate for U.S. Senate. Waters will run against Democratic Senator Tim Kaine and whoever wins the Republican Party free-for-all.

In his speech to LPVA delegates, Waters said his biggest concern is the unsustainable national debt. He characterized the $21 trillion debt as the United States’ biggest national security threat, greater than ISIS or China, and he called for an end to the failed war on drugs, the war on terror, and the war on poverty.

Vowing to campaign under the Virginia flag, the motto of which is, “Thus always to tyrants,” Waters said:

My campaign will call fellow Virginians to remember who we are, and why we fight. The tyrant today is not the king of England. It is our $21 trillion debt. The tyrant is a massive welfare-warfare state funded by the Federal Reserve that is completely unaccountable, unauditable, and 100 percent  responsible for killing the value of every single dollar we earn in this room. The tyrant is invasive. The tyrant is corrupt. The tyrant is bankrupting this country. … The tyrant invades pulpits, businesses, families, laptops, and smart phones.

It doesn’t have to be this way. I say it’s time to crush the tyrant and restore our liberty now.

Waters’ immediate challenge is collecting 10,000 signatures of registered voters, always a big hurdle for third-party candidates. Beyond that, he faces the perennial Libertarian Party obstacle of gaining media recognition. Libertarians’ traditionally low vote percentages make it difficult for candidates to get reporters to take them seriously.

One outside factor might help Waters. The Republican Party of Virginia seems to be in the process of imploding. Mini-Trump candidate Corey Stewart seems best positioned to capture the Republican party nomination, although his victory is far from certain given the number of other candidates also vying for the honor. If Stewart is nominated, he is so polarizing that he will drive many mainstream Republicans out of the party. While Kaine is widely regarded as a genuinely decent guy, he is a cog in a Democratic Party machine that is tilting farther Left every day. Homeless Republicans may well seek refuge with the Libertarian Party.

What’s Wrong with UVa, and What’s Not

Photo credit: Washington Post

There is something wrong with a university that sits on an endowment of $8.6 billion while raising the cost of an undergraduate tuition to $63,000 a year for out-of-state students and $32,000 a year for in-state students, writes Brendan Novak, opinion editor for the Cavalier Daily, the University of Virginia student newspaper.

Novak goes on to make some very good points and some very misguided ones. Both are worthy of discussion.

First, Novak decries the idea of UVa as a “Public Ivy.”

The label “Public Ivy” reeks of a desperation for prestige that is increasingly characteristic of schools like the University. Traditional Ivy League schools have known for centuries that wealth confers status and status confers wealth, and now that public schools like the University have caught on, they seem committed to emulating this model. From a self-serving perspective, this might appear to be a positive development — one could reasonably expect students to celebrate the University’s pursuit of prestige. It’s true, the University’s growing prominence only serves to better the opportunities available to students — and yet it’s hard to not find this obsession with cultural eminence fundamentally troubling. The University is first and foremost a public institution, and its pursuit of elite status detracts from its primary responsibility — to serve the Commonwealth.

Outside of the career schools, higher education in the United States is a non-profit endeavor. Colleges and universities are not profit-maximizing institutions. Rather, they are prestige-maximizing institutions. Elite institutions such as UVa are engaged in a never-ending prestige “arms race” to increase prestige — measured by student SAT scores, the volume of research, faculty distinction, and the like — even while the Harvards, Yales, MITs, and Stanfords seek to preserve or improve their own rankings. There is no limit to institutions’ creativity in devising costly new ways to recruit star students and star faculty; hence there is no upward limit on how much they crave in tuition revenue and endowment size.

So, Novak is quite correct: Insofar as UVa is obsessed with achieving parity with the most prestigious nationally ranked universities in the country, it is detracting from its primary responsibility to serve the Commonwealth.

But then he goes astray. He faults UVa for its under-representation of underprivileged Virginians.

In the Commonwealth of Virginia, 1-in-10 residents live below the federal poverty line. … At the University on the other hand, almost the same proportion of undergraduate students come from the top 1 percent of wealth. Further, two-thirds of students come from the top 20 percent, while less than 3 percent come from the bottom 20. In an ideal world, public schools like the University would be powerhouses of economic mobility, granting underprivileged students a state-subsidized ticket to the middle class. …

Whether it’s a problem of outreach, financials or community development, it is clear that the University could be doing much more to make meaningful inroads into low-income communities.

If the University of Virginia were the only public university in Virginia, Novak might have a point. But UVa is only one of fifteen public four-year institutions in the Virginia higher education system. The system, not UVa, has an obligation to provide “under-privileged students a state-subsidized ticket to the middle class.”

There is nothing wrong with having institutions that are elite by Virginia standards. As Virginia’s flagship university, UVa sets the highest merit-based admission standards and provides the most rigorous academic education (with the possible exception of the College of William & Mary). Given the powerful correlation between socio-economic status and academic achievement in high school, it is inevitable that the UVa student body will be compromised disproportionately of students from higher-income households. The university provides generous financial assistance to the small number of students from lower-income households who defy the odds and become high academic achievers. No one is turned away for an inability to pay the tuition. The barrier to having more lower-income students at UVa isn’t insufficient financial aid, it’s the lack of lower-income students who meet the admissions qualifications. That is the fault of failing K-12 institutions, or perhaps society at large, not UVa.

Practically speaking, the only way to achieve Novak’s goal of greater socioeconomic diversity is to lower admissions qualifications. Does anyone want UVa to relax standards — especially when considering that there are numerous other institutions in Virginia that are well equipped to educate students with less-rarefied credentials?

Speaking as a Virginia citizen and a UVa alumnus, I want to see UVa continue to strive for excellence, but not at the expense of displacing more Virginia students or making the cost of attendance more financially burdensome for qualifying middle-class students. There is a proper balance, and UVa hasn’t achieved it. But adopting Novak’s critique would push university priorities even further off kilter. The solution would be worse than the cure.

The Virtues of an Ancestral Diet

Elicer Tribz explains how to make cinnamon spice from the bark of the cinnamon tree.

On the hillside above the Blancaneaux Lodge in Belize, six gardeners tend to a three-and-a-half-acre organic garden that supplies the hotel’s three restaurants with delectable vegetables, fruits, beans, and herbs.

As a prelude to a communal dinner at the hotel’s Garden restaurant, Elicer Tribz takes lodge guests on a tour of the garden. He proudly describes how he and his fellow gardeners nurture the soil and tend to the lettuces (10 varieties), the cherry and Roma tomatoes, the squash, zucchini, carrots and celery, and innumerable herb bushes and fruit trees. He explains how the gardeners create a natural fungicide using microorganisms found in the rain forest, and how they man the garden literally around the clock when fending off attacks of woolly caterpillars.

Throughout the tour, Tribz pinches off leaves for the guests to smell and taste. The vegetables are not only free of pesticides and herbicides, thus safe to eat off the vine without washing, they are very flavorful. The fresh food at Blancaneaux puts to shame the grocery store vegetables that I normally eat, genetically engineered as they are to survive lengthy spells as agricultural inventory. At Blancaneaux guests enter a world of more intense taste.

I can also vouch that after three days of hiking like a mountain goat and eating healthy meals, I felt great. This was life in the blue zone — the recipe for living a longer, healthier life.

Eating organic food was not an experience my wife and I had been looking for when planning our vacation. It was an unexpected bonus. As total coincidence would have it, on the airline flight to Belize I plowed through “The Dental Diet,” which touted the virtues of organic and free-range foods. Combining the theory from that book with the experience of eating organic food at Blancaneaux set into motion a train of thought about the relationship between health, the “ancestral diet” (as author Steven Lin calls it), economic disruption, food deserts, and economic inequality.

Let me advance three nested propositions. First, many of the chronic diseases in 21st century society — not just the biggies like heart disease, obesity and diabetes but a host of auto-immune diseases — originate from our modern diet. To prevent those diseases rather than merely treat them, North Americans, Europeans, and anyone else embracing a conventional “western” diet” must radically change their eating patterns — most notably by consuming fewer processed sugars and carbohydrates, more grass-fed cattle and poultry, and more fresh fruits, beans and vegetables. Second, a dietary revolution by necessity will require a wrenching agricultural and food-processing revolution. And third, the transition from industrial agriculture to free range/organics will accentuate the divide between those who can afford good food and the health benefits that accrue from it and those who can’t.

Lin looks at health and diet issues through the prism of his discipline: dentistry and oral health. Our mouths host an extensive biome that interacts with our bloodstream (especially if we have gum disease) and our gut biome (every time we swallow saliva). Lin’s exploration of this interaction, which medical science is only beginning to understand, led him to several intriguing perspectives and insights.

Lin argues that dental disease was almost non-existent among early homo sapiens. Likewise, crooked teeth, which we moderns think of as the unlucky outcome of the genetic lottery, were equally rare. The absence of dental maladies among pre-agricultural humans is all the more remarkable when one considers that they did not avail themselves of tooth brushes, tooth paste, dental picks, braces, and orthodontics! How could that be possible? Lin’s answer: The ancestral diet of meat, grains, fruit, and, later, dairy — not processed carbohydrates — allowed the mouth biome to remain in balance, reducing acidity, and for the upper and lower jaws to grow larger and stronger with room to accommodate more teeth. With plenty of space in the jaw, teeth in early homo sapiens, like those of pre-agricultural societies documented within living memory, grew in straight and even.

Cavities, bleeding gums and crooked teeth are only the most visible of the health disorders set into motion by the agricultural revolution, with its widespread adoption of carbohydrate-laden wheat, rice, and maize, and then the industrial revolution, with its widespread adoption of processed sugars. The positive accomplishment of the agricultural and industrial revolutions is that they fed billions of people. The downside is that industrially produced food afflicts mankind with a host of chronic diseases.

Animal products, says Lin, should be sourced from pasture-raised and free-range livestock, not from grain-fed livestock pumped up with antibiotics. Likewise, seafood should be caught from natural waters, not farmed. Fruits and vegetables should not be sprayed with pesticides and antibiotics, which alter the microbiome of the soil as well as that of their own genes. We should purge sugar, white flour, vegetable oils from our diets. In their place we should consume more fiber, probiotics and prebiotics. Throw your Captain Crunch into the trashcan, and eat your Brussel sprouts.

To my mind, the virtue of Lin’s book is not the nutritional guidelines — they will be familiar to many readers following other dietary regimens — as much as the persuasive, science-based justification he offers for them. For purposes of argument, let us accept that widespread adoption of a organic/free-range diet is necessary to restore the health of America’s population with its many chronic medical conditions. Now let us confront the implications of adopting those guidelines on a massive scale.

We know that vegetables, beans and fruits can be raised free of herbicides, pesticides and antiobiotics on a fairly large scale. Blancaneaux shows how it can be done, as do innumerable other organic farms such as Polyface Farm in Virginia’s Shenandoah Valley. The question is at what cost. Organic produce is more expensive, mainly because the gardening is more labor intensive. Grass-fed beef and free-range chicken also are more expensive, mainly because they require more land.

Organic and free-range foods are niche products, accounting for 4% of total U.S. food sales, and they have little impact on agricultural land and labor markets. But increase organics’ market share to 50% — never mind 100% — and farms will experience massive labor shortages and land scarcity. As these key inputs of organic food increase in cost, the price of organic food will rise as well. While organic and free-range food command, say, a 30% price premium in grocery stores today — I base that guesstimate on the price differential I see at Kroger — I conjecture that the premium could well triple or quadruple.

America’s educational divide will accentuate the differential impact on different segments of the population. Those most motivated to alter their diets — not any easy task — are those with the education, income and inclination to read books like “The Dental Diet” and the agency to believe that they have the power to change their lives for the better. Lower-income Americans, who tend to be more fatalistic about their lot in life, will be less likely to change.

If America has a problem now with food deserts — unequal access to healthy food — the disparity will increase dramatically if the price of organic/free-range food doubles. The nutritional divide will become more marked, and so will the ensuing health divide.

How do we offset such a pessimistic outcome? The default response would be to give poor people more fresh food. But giving them healthier food provides no guarantee that they will eat it. Far better would it be to involve the poor in raising their own food, whether cooperatively in communal urban farms, individually in back-yard gardens, or perhaps as employees in multi-storied urban greenhouses. People place far greater value in a thing that they earn through their own sweat and toil.

Whatever the long-term solution to the problem of food inequality, the scientific case is growing for the argument that we are what we eat. I’m ready to do what it takes to stay healthy and active, even if it means eating more cauliflower and fewer french fries. Hopefully, other Americans will find a way to do so, too.

Howler Monkey Spotting

Finally – a howler monkey spotting!

It took some doing. We rode by skiff to Monkey River Village, a Belizean village down the coast where the population made its living fishing, lobstering, and escorting tourists up the Monkey River to see the howler monkeys. There, we picked up a guide, Brian, who took us upstream a couple of miles. The whole trip, he treated us to an entertaining account in barely understandable English about the flora and fauna of the rain forest and how his grandparents used the palm fronds, and bark and what-not to build their dwellings and cure their ailments. Brian belongs to one of Belize’s more colorful ethnic groups, the Garifuna, descendants of native Indians and castaway African slaves who have their own distinctive culture and language.

At length, thanks to Brian’s sharp eye, we spotted some monkeys. There they were, feeding off the leaves of a tree by the river, hanging by their prehensile tails, uttering the occasional bark (but no full-throated howls) and otherwise loafing around. It’s not a hard business being a howler monkey. Predators can’t get you high up in the trees. You don’t have to worry about humans — you’re a protected species, and an entire village of 350 or so souls makes its livelihood showing you to people. Even the tourists are no bother. They’re stuck on boats in the middle of a crocodile-infested river. For howler monkeys, life is sweet.

The Tax Cuts Are Working

by Jack Hubbard

We’re barely three months into 2018 yet, and Virginia is already off to an incredible start.

The passage of the Republican tax plan in late 2017 has allowed Virginia’s more than 700,000 small businesses to breathe a sigh of financial relief.

Prior to the passage of the Tax Cuts and Jobs Act, the majority of small businesses (95%) were taxed at nearly 40% by the federal government. After state and local taxes were added in, that number often reached 50%. This astronomically high tax burden diverted valuable resources from job growth to government coffers. President Trump and Congress knew something had to be done.

Under the new tax code, small businesses whose income is less than $315,000 can now claim a 20% tax deduction, leaving more resources for investment and job creation. In Virginia, that increased deduction applies to nearly all of Virginia businesses. And these businesses now can take these tax savings, reinvest them, and expand their enterprises.

What happens when businesses expand? New hiring follows, putting more Virginians on the career ladder. And more Virginians working leads to greater investment in the Old Dominion.

Additionally, the tax plan’s lower tax rates and increased deductions have empowered businesses throughout the country to pass on tax savings and to their employees. So far, more than four million Americans have received a pay increase or bonus from their employer since the tax bill was passed. Larger companies such as Walmart, BB&T Bank, and Capital One have all increased starter wages.

Here in Virginia, the Bank of James in Lynchburg has raised starting wages to $15, added vacation days, and increased its charitable giving plans.

The list of beneficiaries of the tax bill continues to grow. Even many public utilities have announced that they will be cutting rates on their customers. Residents in nearby Washington, D.C., will see their electric rates cut after Pepco announced lower rates during the first quarter of 2018, and I can only hope that Virginia companies follow suit. These cuts are occurring only because President Trump and Congress did their jobs, and people are seeing real  money in their pockets.

Media reports notwithstanding, the Tax Cuts and Jobs Act has proven itself time and again in only one month since its passage.

While Democrats may call tax savings “crumbs,” the real-world benefits of tax cuts suggest otherwise. Job creators—and the people they serve—are more optimistic than ever. Imagine what the rest of 2018 will have to offer.

Jack Hubbard owns the The HomeMade Gin Kit in Alexandria.

Amazing Vines

If I have good karma and come back as an elevated life form, I hope to return as an evolutionary biologist. Upon ascending to something close to Buddhahood, I would like to be E.O. Wilson (whose most recent book I mentioned in my previous post). As it is, I am who I am, and I’m endowed with far more curiosity than knowledge.

That curiosity was sparked two days ago by my visit to Barton’s Cave in Belize, a cave used by the ancient Maya for ceremonial religious purposes including human sacrifice. Steep limestone cliffs flank the entrance, and from those cliffs hang remarkable vines related to the ficus family.

These vines originally took root in the nooks and crannies of the rock formation, extracting whatever water and nutrients they could from their barren perch. Nothing terribly unusual about that. All manner of scrubby plants find precarious rocky footholds. But these vines do something more — they grow a vine-like root that, over the process of years — our guide said decades — descends twenty-five to thirty feet until they reach the water below. Just think about that — for years those useless appendages dangle to little effect. But eventually they reach the water, and there they become transformed.

The vines sprout roots in the water. And over time, the roots trap sediment from the current, creating their own ball of nutrient-bearing soil. Over time, the vines grow thicker and stronger, yet they descend no deeper than a than a few inches. They have what they need, and they go no farther. I have seen tropical vines in other locales drop from trees and implant roots into the ground, but never have I spotted such a thing as this. I find it astonishing.

If Charles Darwin and E.O. Wilson were the godheads in the great chain of being, I would rank somewhere between a fruit fly and an anopheles mosquito. I have traveled relatively little, and what I have seen I have viewed through an ignorant eye. But I do look at the world of nature with a sense of wonder, and that is its own reward.

Demon Ants from Hell

Ant superhighway

This morning I was taking a standard tourista photo of some exotic rain forest foliage when I absent-mindedly planted my foot on a plot of sand about a foot in diameter. It looked harmless enough, and I paid it no mind as I aimed and clicked my camera. Suddenly, I felt a sensation as if a stinging nettle were wrapping itself around my right foot. I looked down and found a dozen tiny red ants roaming over my toes and metatarsal. The bitty bastards were attacking me!

I moved away and shook them loose. I could see that the sand was swarming with the little varmints.

I’ve never encountered the likes of this in Virginia.

In his latest book, “The Meaning of Human Existence,” E.O. Wilson wrote briefly out the highly structured social lives of ants. The leafcutter variants of ants, he observed, shared the distinction with humans as being the only creatures on the planet that cultivated another species for food. Workers chew off pieces of leaf from a particular plant (the identify of which eludes me) and carry them back to their colony. Underground, the leaf fuels the growth of a fungus that the ants eat. As it turns out, the ants that bit me were that kind of ant. These ants have evolved highly sophisticated social behavior.

Before: nothing much to see here, just a patch of sand.

The Belizean leafcutters I encountered had blazed pathways the width of a bicycle tire track from their colony to nearby trees.  These trails are like ant highways. Interstate 95, you ain’t seen nothing! If you get down on your hands and knees for a close inspection, you can see the little demons racing in both directions, many of them bearing bits of leaf 20 or 30 times their size. I don’t think they even pay taxes.

After: Poke the colony with a stick, and the swarm will take out your foot in the blink of an eye.

Such ant colonies are found all over in Belize. In addition to being far more ilndustrious than our fat, lazy American ants – they surely would surely perform work in the United States that our ants wouldn’t want to do — Belizean ants are furious warriors. Try swiping a stick across the placid top of an ant colony, and see what happens. Instantaneously, a swarm of hundreds of ants will boil out of the ground to defend the homeland.

I don’t know if my metaphor is anatomically correct, but I do feel safe in saying that Belizean ants kick American ant ass. If we want to make America great again, we’ve got a lot of work ahead of us.