Author Archives: James A. Bacon

“Anchor Institutions” as Foundations of Rural Economic Health

Tom Barkin, president of the Federal Reserve Bank of Richmond

by James A. Bacon

A couple of days ago I lamented that the purveyors of the “conventional wisdom” at a recent Federal Reserve Bank of Richmond conference on rural development had little new or insightful to offer. I must offer a partial retraction. A friend has forwarded to me a speech by bank President Tom Barkin. While most of the points he made were familiar, some were new to me — and, hey, I figure if they’re new to me, someone who has been tracking rural development issues for some 30 years, they’re probably new to many others.

In that speech, “Moving the Needle in Rural Communities,” Barkin discusses the disappearance of “anchor institutions” in rural communities such as banks, hospitals and colleges. I’ve discussed the closure of rural hospitals on this blog, but always in the context of the rural health care crisis, never the rural economic crisis. I’ve also written about the travails of small, private liberal arts colleges, but, again, only in the context of higher education affordability, never the rural economic crisis. And, frankly, it never occurred to me to write about the disappearance of banks. However, the concept of anchor institutions seems to be a useful one for understanding rural economic health, and their continued erosion is a worrisome trend.

So, here’s what Barkin had to say: Continue reading

Robin Hood and the Borderline Itemizers

by Bill Tracy

I am pleased to report that Robin Hood is alive and well in Virginia! Most taxpayers are now receiving a state tax rebate courtesy Governor Ralph Northam and the General Assembly. Eligible taxpayers may receive up to $110 for individual filers and up to $220 for a married couple filing jointly.

But, hey, wait one minute! Where the heck is all of this “income redistribution” cash coming from? Taxpayers like me, of course, had their state taxes increased substantially. If you will recall, about a year ago, Gov Northam was saying that some Virginia taxpayers have been underpaying taxes, and he aimed to fix that by increasing them.

Who were these deadbeat Virginia taxpayers? Some are senior citizens like me who have committed the “crime” of not having enough itemized deductions to meet the new higher Federal standard deduction. As senior citizens, my wife and I now have to come up with $26,600 of itemized deductions or suffer the consequences of Virginia’s new tax bite. Continue reading

Is Solar Permitting Stacked against the Little Guy?

by James A. Bacon

The Van Kesteren family, owner of  Van Kesteren Farms in Accomack County, wants to build solar panels on 180 acres as a way to supplement the income from its farming operations. But the price tag for connecting to the regional grid is posing a major barrier.

The estimate for connecting to the Eastern Shore electric grid has increased from $3-4 million in March 2017 to $26.5 million today, according to an article in Energy News Network. The article focuses mainly on the Van Kesteren family’s thwarted ambitions, as made clear by the sub-head: “An Eastern Shore farming family is frustrated that its solar project is at the mercy of the local utility and grid operator.”

But the story illustrates a broader story regarding a critical and often overlooked aspect of solar-power economics: how some proposed locations for solar farms can be rendered uncompetitive by high interconnection costs. Continue reading

From Purple to Blue

by James A. Bacon

Virginia stopped being a red state a decade or two ago. Despite a Democratic sweep of all statewide elections (U.S. senators, governor, lieutenant governor, and attorney general), one could maintain the pretense that Virginia is a “purple” state thanks to a Republican-dominated General Assembly. But it has been long apparent that Republican control will end with the 2019 elections. As further evidence for that proposition, as if any were needed, now comes a new Wason Center for Public Policy poll.

Key finding: Democrats lead Republicans by 13% on the generic ballot test among likely voters 40% to 36%. Ds have a strong advantage over Rs in voter enthusiasm: 62% to 49%. More Dems than Republicans say they “definitely” will vote” than either Republicans or Independents. As a general rule, polls are decreasingly trustworthy, but the Democratic advantage is so overwhelming that it cannot all be attributed to implicit bias in the polling methodology.

Come January Democrats will control all statewide offices and the General Assembly. Virginia, we now can say, is the southernmost Northern state — Maryland with a larger rural hinterland. Continue reading

What? More Solar Means More NOx? No One Saw that Coming!

Duke Energy solar farm

by James A. Bacon

The surge in solar power production in North Carolina has caused an increase in nitrogen oxide (NOx), a serious air pollutant, North Carolina’s Duke Energy has concluded. Without changes to state regulatory policy, according to a report by North State Journal, carbon dioxide (CO2) emissions also could increase.

These counter-intuitive findings stem from the fact that solar power is an intermittent source of power, which must be offset by on-again, off-again generation from fossil fuel sources, primarily natural gas. The on-and-off cycling of power stations leads to inefficient combustion and higher NOx emissions. The effect on CO2 emissions is less clear, although utility officials raised the prospect of a “slight increase” in CO2 at the plant level under certain conditions.

I have no idea if Duke’s conclusions will stand up to close scrutiny. For sure, they will be attacked by those who are committed to intermittent renewable energy sources at any cost. But the debate in North Carolina is highly relevant to Virginia. North Carolina has the largest installed base of solar power of any state outside of California. But Virginia is adding solar capacity rapidly, and the Northam administration has set a goal of attaining a zero-carbon electric grid by 2050.

Let me be very clear. I am not advocating a dial-back in Virginia’s commitment to solar. But I do say, if we are going to aggressively expand our reliance upon an intermittent energy source, we need to know what we’re getting into. Continue reading

Why Are So Many Rural Virginians Stuck in Place?

Declining geographic mobility. Graph credit: McKinsey Global Institute

by James A. Bacon

A recurring question on this blog and elsewhere is why don’t more Americans (and rural Virginians) move to areas of greater economic opportunity? Why do they remain stuck in communities with high unemployment and low wages? Americans have always moved to economic opportunity in the past. What’s different now?

Those questions give rise to another set of questions. If people refuse to budge, should the rest of society take pity on them and subsidize their choice to stay put? As Don Rippert commented in a previous post, “The best thing the state can do is issue relocation vouchers to rural residents.”

The authors of a McKinsey Global Institute report, “The Future of Work in America,” tackles the geographic-mobility question. The biggest factor, they suggest, is the vast and growing gap in the cost of living between prospering cities and lagging communities. “Variations in the cost of living — and particularly in housing costs — are a clear contributing factor holding back geographic mobility in the United States. The cities offering the greatest job opportunity also happen to be expensive places to live.” Continue reading

Bacon Bits: Higher Ed Updates

Image credit: Virginia Tech

Billion dollar baby. You know Virginia Tech has made the big time when its projects hit the $1 billion mark. That’s how much Tech’s innovation campus in Alexandria, which is tied to Amazon’s HQ project, will ultimately cost. The first phase, a 300,000-square-foot academic building, will cost a mind-bending $275 million, reports the Washington Business Journal. (If it’s any consolation, that figure does include the cost of furniture.) Eventually, the campus will total 1 million square feet of space, including incubator space for new startups, offices for industry collaboration, and convening space for alumni events as well as ground-floor retail “knitting the campus into the fabric of Alexandria.”

VCU R&D Hits Record. Virginia Commonwealth University, Virginia’s third-ranked research university, raised a record $310 million in sponsored research funding in fiscal year 2019, reports Virginia Business. The number represents a 14.6% increase from the previous year. The top recipient was the Center for the Study of Tobacco Products, which will launch a five-year study predicting outcomes of government regulations of tobacco products, including e-cigarettes.

Enrollment up at UVa and W&M. Fall 2019 enrollment numbers are coming in for public universities, and the news is good — at least for the top-tier institutions, according to this Forbes magazine tally. Here in the Old Dominion, the University of Virginia reports a first-year class size of 3,920 students, an increase of 80. Despite aggressive tuition increases in recent years, the College of William & Mary reports anticipated enrollment holding steady around 1,540, down only six students from the previous year. So far, falling college enrollments have hit mainly community colleges and small liberal-arts institutions.

— JAB

The Geographic Impact of Automation

Projected job growth by 2030. (Darker colors indicate faster job growth). Source: McKinsey Global Institute. Click for larger image.

by James A. Bacon

A handful of megacities have captured a majority of U.S. job growth since the Great Recession and could win 60% of job growth through 2030, according to a July McKinsey Global Institute report. A middle tier of “stable” metropolitan areas and thriving niche cities will continue to see job growth, though at a more modest rate than the megacities, while the bottom tier of lagging metros and rural areas will see only marginal growth, if any.

The differential rates of job growth will be driven in part of the next wave of automation, which will displace many office-support, food-service, manufacturing, and customer-service jobs, while a dynamic economy creates more jobs in healthcare, STEM fields, business services, and work requiring personal interaction, says the report, “The Future of Work in America: People and Places, Today and Tomorrow.” “While there could be positive net job growth at the national level, new jobs may not appear in the same places. The challenge will be in addressing local mismatches and help workers gain new skills.”

If McKinsey’s “midpoint” job projections are close to the mark, the Washington metropolitan area will continue to dominate job growth in Virginia, while “stable” metros like Richmond and Hampton Roads will contribute to a lesser degree. The Shenandoah Valley and Roanoke-Lynchburg area will see marginal growth, and the rest of the state negative job growth.

These conclusions put a filigree on what everyone already knows about the challenges facing rural Virginia. What, then, is to be done? McKinsey offers some general strategies for adapting to our brave new world that sound remarkably similar to what I had to say in yesterday’s blog post about rural development. And I quote: Continue reading

Rural Development: the Conventional Wisdom Won’t Cut It

Shenandoah Valley: Not all rural areas are created equal

by James A. Bacon

Virginia’s rural communities face a hard slog maintaining their local economies in a globalizing world in which their traditional advantages, cheap land and labor, are no longer competitive. That slog looks even harder when leading thinkers are so bereft of fresh ideas. The utter failure to think beyond the conventional wisdom was on full display, as can be gleaned from this report by Virginia Business, at a conference hosted by the Federal Reserve Bank of Richmond about rural economic development in the Fifth District, which includes Virginia, West Virginia, Maryland and the Carolinas, 

There’s nothing wrong with the conventional wisdom as far as it goes. Yes, rural areas need to fine tune their workforce training programs. Yes, rural communities need better broadband access. Yes, rural areas need to retain local anchor institutions like hospitals, banks and colleges. Yes, above all, rural communities need to do a better job of retaining their college-educated youth. 

“Changing the prospects of a town, it seems to me, starts with aligning the mindsets of the people in that town,” said Richmond Fed President Thomas I. Barkin. “And a great metric is whether the kids who grow up and go to school there choose to come back.”

Yes, yes, yes — but how? Continue reading

Hurricanes, Solar Panels and Grid Resilience

by James A. Bacon

According to what the nation’s ruling elites tell us is the climate-change consensus, a warming climate increases the frequency and intensity of hurricanes. “Because global warming is intensifying, scientists expect the number of extreme storms to continue rising,” writes David Leonhardt, a New York Times opinion columnist.

One would think, then, that this insight would inform the remedies proposed for climate change, such as re-engineering the nation’s electric grid to rely almost exclusively upon wind and solar power. If the frequency and intensity of hurricanes is increasing, it would be appropriate to ask here in Virginia, what standards do we have in place for the construction of wind turbines and solar panels to ensure that they can withstand hurricane-force winds?

North Carolina had a recent opportunity to observe the interaction of hurricanes and solar panels. Hurricane Dorian pummeled the Tarheel state last month, striking solar a solar farm in Currituck County with wind speeds near 60 miles per hour. The solar arrays are supposed to withstand wind speeds of up to 120 miles per hour. How did they hold up? Continue reading

New Theme for Bacon’s Rebellion Header

Inspired by recent events and growing cynicism, I have installed a new slew of header images for the blog. Can you guess the theme?

Here’s a clue: Great Dismal _____.

— JAB

UVa’s Booming R&D Program: What It Means

University of Virginia research funding. Source: UVa.

by James A. Bacon

One can debate how well the University of Virginia is serving the interests of students, families and the general citizenry through its aggressive increases in tuition, fees, and other costs of attendance. But there is no denying that Virginia’s No. 2 research university has been successful at attracting outside research dollars.

Sponsored research funding has increased from $311 million in 2014-15 to $412 million in in 2018-19 — a 32.5% increase, according to data recently released by the university.

“Our outstanding teams of faculty, staff and students across all the schools have propelled us over the $400 million mark in research funding,” said Executive Vice President and Provost Liz Magill. “Meanwhile, researchers … are targeting interdisciplinary approaches that improve the chances of receiving grants down the road.” Continue reading

How Walkable Urbanism Is Guiding NoVa Growth and Redevelopment

Image credit: Virginia Business

by James A. Bacon

Between Amazon, Micron Technology, and smaller deals too innumerable to list, Northern Virginia continues to dominate the economic action in Virginia. In previous business cycles, economic growth unleashed disconnected, low-density, auto-centric development that served immediate needs for office space but literally embedded in asphalt, concrete and steel one of the nation’s most dysfunctional transportation systems. This time, there are indications that the region will get it right — well, maybe not entirely right but better than before.

Fast-growth metropolitan regions everywhere are afflicted by two inter-related diseases: unaffordable housing and overloaded roads and highways. A consensus has emerged in much of Northern Virginia — and, trust me, after 35 years of monitoring NoVa growth issues, I haven’t seen such widespread agreement — that the old suburban-sprawl growth model is no longer viable. Northern Virginia must evolve toward walkable urbanism.

Indeed, local economic developers are expressing the hope that walkable urbanism will enable Northern Virginia to move from a second tier technology center to a Tier 1 center without choking on its own growth. In a profile of the massive activity occurring in Tysons, Arlington, and Alexandria, Virginia Business magazine quotes Christopher Leinberger, the professor of urban real estate at George Washington University who popularized the concept of walkable urbanism. Northern Virginia “is sitting pretty,” he says. “It’s a remarkable thing it has pulled off. … It’s nailing its audition for the part by busily creating precisely the kind of high-density, multiuse neighborhoods this new world demands.” Continue reading

Virginia Annals of Political Correctness, October 2019

Cancel culture comes to Virginia. Anna Grace Calhoun, a first-year engineering student at the University of Virginia, detests Dominion Energy. She regards Dominion as a predatory, monopolistic, rate-gouging and environmentally retrograde blight upon Virginia, and she has distilled her-left-wing critique into a letter published in the UVa student newspaper, the Cavalier Daily. She is entitled to her views, of course, and many people share them. What warrants mention in the Virginia Annals of Political Correctness is that she goes beyond criticizing the utility to calling for the university to disassociate itself from the company. “If the University and its associated organizations take seriously their espoused goal of producing positive leaders,” she writes, “they need to think harder about what careers and corporations they’re funneling students into.”

That’s how the so-called “cancel culture” works — define your enemy, stigmatize it, ostracize it, and and drive it from the public sphere.

Another hate hoax. It was a big story in the national media when a 12-year-old African-American student accused three white male students at Immanuel Christian School of holding her down in a school playground a week ago, covering her mouth, making racist comments about her “nappy” hair, and cutting her hair with scissors. Not only did the story feed the stereotypes of modern-day liberals and progressives — white, male Christian kids acting atrociously, like the MAGA hat-wearing kid smirking at the Native American drummer — it offered as a delicious bonus the fact that Vice President Pence’s wife Karen Pence was a part-time art teacher there. After a Fairfax County police investigation, however, the girl has recanted her story about the school-yard incident. Refreshingly, in this case the mainstream media was quick to update and correct the story.

The Boom in Virginia Home Schooling

by James A. Bacon

Three percent of Virginia’s school-age population, about 43,500 children, is being home schooled, reports the Capital News Service. If home schoolers constituted a school division unto themselves, they would represent the seventh-largest district in the state.

The number of home-schoolers in the state has grown more than 20% over the past five years. The percentage of kids educated at home is highest in rural counties. Floyd County and Surry County lead the pack with 14% of children receiving their educations at home.

What accounts for this remarkable growth? One factor is that Virginia has relaxed its laws on home schooling over the past 15-20 years. For instance, a parent is no longer required to hold a four-year college degree. Another is that the home-school “industry” has increased in sophistication, creating teaching materials, online resources, and collaborative models whereby families can share resources. Continue reading