Category Archives: Business and Economy

Permanent COVID Reg Called “The Fifth Dragon”

By Steve Haner

Most Virginia employers probably have not read, let alone fully complied with, the emergency temporary standard on protecting their employees from COVID-19 adopted back in July. Yet the public comment period on the permanent version of the rules, which can carry major sanctions, closes this Friday.

Only twenty comments had been filed as of Monday morning, half of them anonymous. So far, the proposed permanent version is not generating the level of activity that surrounded the proposed temporary rule. The Department of Labor and Industry’s Safety and Health Code Board allowed no public hearing before adoption, only written comments.

File a comment on the proposed permanent standard here. You can read the comments to date here. The proposed permanent standard can be read here.

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A Capitalist Solution to Food Deserts

Militant agriculture

by James A. Bacon

Yesterday, channeling the spirit of Nassim Nicholas Taleb, I asked what a young person should do if he or she wanted to make the world a better place. Broadly speaking, there are three approaches. One is activism in which people who, informed by a desire to improve the lives of those less fortunate than themselves, lobby for reformist government policies and create philanthropic programs to address perceived needs. Another is militancy. Convinced that the entire system is corrupt, militants waste little time ameliorating the condition of individuals but seek to overthrow the established order. A third approach is capitalism, in which entrepreneurs find creative ways to meet previously unmet needs.

Activist agriculture

We need more entrepreneurs.

If Virginia has an affordable housing crisis, we can’t solve the problem in the long run by passing eviction laws or enacting more government-subsidized housing programs. We need entrepreneurs who can find innovative ways to create lower-cost housing. If lower-income Virginians are afflicted by payday lenders charging high fees and interest rates, we can’t address the credit needs of the poor by legislating payday lenders out of existence. We need entrepreneurs who find innovative, low-cost ways to extend small amounts of credit. Continue reading

End the Coalfield Boondoggle

Alpha Natural Resources mine facility

By Peter Galuszka

The General Assembly’s auditing watchdog has recommended the elimination of  two coal tax credits that have been a bonanza to Virginia coal companies worth $315 million from 2010 to 2018 but have created only 10 jobs.

The report by the Joint Legislative and Audit and Review Commission (JLARC) studied 16 different tax credits to boost the state’s economy but recommended  only eliminating the ones involving coal production.

Those credits involve the Coalfield Employment Enhancement Tax Credit, formed in 1995, and the Production Incentive Tax Credit, formed in 1986 to help with electricity generation.

Virginia’s coal production peaked in 1990 and has been declining since. In 2000, for instance, it had been 33 million short tons but in 2019, it had dropped to 12 million short tons.

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A Sad Emblem of Our Times

By Dick Hall-Sizemore

A venerable Richmond-based printing company closed last May. Somehow, that really saddened me. Perhaps because it was located not far from where I live. Perhaps because it had been around for so long.  Perhaps because it had a niche business that seemed sort of neat to me. Perhaps because its closing seemed so emblematic of the times.

I meant to comment on it then, but other topics and activities kept bumping it down the list. Then, Jim’s post yesterday about the Virginia economy and some of the follow-up comments brought it back to my mind.

The William Byrd Press was founded in 1913. In 1984, it merged with a North Carolina company and was renamed Cadmus. By 2007, it had 500 employees and was the world’s largest printer for publishers of scientific, technical, and medical journals. It was the fifth largest printer of periodicals in North America. Continue reading

Is Green Hydrogen the Answer?

By Peter Galuszka

Utilities, including Dominion Energy, are increasingly exploring the use of now-costly hydrogen technology to produce electricity with little or no carbon.

One of the most promising uses involves using excess renewable electricity from solar farms or wind turbines to power electrolyzer devices that strip hydrogen away from oxygen in water. The hydrogen is then used to power special batteries.

The result? Carbon free power that is available at just about any time when winds are blowing or the sun isn’t shining.

According to the Wall Street Journal, Dominion plans on experimenting with hydrogen for another use. It will try to blend hydrogen into its natural gas distribution system to reduce carbon and methane emissions. It will be testing a 5% hydrogen blend in some natural gas shipments next year, the Journal reports.

Eventually, it may go the route of electrolyzers and use solar and wind power to produce hydrogen. It appears that Dominion’s experiments may take place in the Far West where it owns power generation and distribution systems in Utah.

Another firm that has plans for hydrogen is NextEra Energy Inc., based in Florida. It plans on using hydrogen and natural gas to run a power plant in California. “What makes us really excited about hydrogen is that it has the potential to supplement significant deployment of renewables,” the Journal quotes NextEra CFO Rebecca Kujawa as saying. Continue reading

COVID-19’s Long-Term Changes in Virginia

by DJ Rippert

In the long run…  Over the past eight months COVID-19 has dramatically impacted the world, the United States and Virginia.  One hundred and twenty thousand cases of COVID-19 have been reported in Virginia  Over 2,500 people have died from COVID-19 . The cases, hospitalizations and deaths continue to grow in the Old Dominion. One year ago unemployment in Virginia hovered at 3%. Today it is 8%. Protests and rioting, possibly catalyzed by the COVID-19 lockdowns, have occurred regularly in several Virginia cities as well as Washington, D.C. Schools in Virginia moved to virtual teaching last Spring and many schools will open this Fall with either fully or partially virtual teaching. Nobody doubts the short- and mid-term effects of COVID-19. But what of the long-term effects? What impacts of COVID-19 will be felt after this version of the Coronavirus is gone?

The Spanish Flu (1918), Polio (1916 – 1955), H2N2 (1957), HIV/AIDS (1980s -), Swine flu (2009), COVID-19 (2020 -). Epidemics have broken out in the United States since the colonial days. Smallpox, yellow fever and cholera outbreaks plagued the country for centuries. The Spanish Flu pandemic was far worse than COVID-19 (to date). That flu struck in four waves and is estimated to have killed up to 50 million people worldwide. However, most Americans today would say that the Spanish Flu didn’t create major long-term changes in the United States. Some would disagree. Academics like Andrew Price-Smith believe that flu tipped the balance toward the allies in World War I. The growth of predominantly female-led nursing in the US may have been a consequence. In utero exposure to the pandemic may have negatively affected the health and prosperity of those exposed. Some survivors of the Spanish Flu never fully recovered. Despite all that, the Spanish Flu was called “the forgotten pandemic” until COVID resurrected interest. Economically speaking, the end of the Spanish Flu coincided with the start of the Roaring Twenties, making it hard to find long -term negative economic impacts from that pandemic. Continue reading

Maybe We Can Sue

by James C. Sherlock

Updated August 30, 3:30 pm

I wrote yesterday about a House of Delegates bill that ultimately was passed by the House Committee for Courts of Justice as House Bill No. 5074 Amendment In the Nature of A Substitute (the bill).  

I wrote of its effects on public officials and owners and managers of private companies for violations of COVID-19 regulations. The bill makes them not just accountable to state and federal regulators, but also personally civilly liable for the slightest violation of any part of the virtually unclimbable wall of applicable regulations. And Virginia has the strictest COVID-19 occupational safety regulations in the nation.

This essay will discuss the ethics of two different original bills and reveal the secretive process by which the final substitute was developed in committee. It will ask the General Assembly to clean up a scandal of its own making.

Some may say this “goes on all the time.” It may, but that does not mean it should.

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For Virginia, Nobody’s Home in the Congressional Infrastructure and Appropriations Committees

by James C. Sherlock

Incredible and statistically unlikely as it sounds, the Commonwealth of Virginia has not a single member on either of the Congressional House or Senate Committees that decide what infrastructure projects are authorized, or on either Appropriations Committee that decides what is spent on such projects and on everything else.

Those projects include the water resources projects such as hurricane and flood mitigation that we have been discussing this week.

The Committees in question are:

  • Senate Committee on Environment and Public Works (11 R, 10 D),
  • House Committee on Transportation and Infrastructure (37D, 30R) and
  • Appropriations Committees of the House (23 R and 30 D) and Senate (16 R 15 D).

That is a total of 120 House members and 52 senators. And we got swept. Virginia may be unique among the states with zero representation on any of those committees. Continue reading

If You Pay Full Price for Flood Insurance, Ask our City/County Manager Why

Roanoke flooding in 1985

by James C. Sherlock

There were lots of comments in my last post about government programs to mitigate flooding damage in flood plains, specifically about buying and tearing down houses that repeatedly flood.

One of the carrots to do so is Community Rating System (CRS) discounts to flood insurance in communities that take an active role in flood plain risk mitigation.

CRS is a part of the National Flood Insurance Program (NFIP).  It is an incentive program that recognizes and encourages community floodplain management activities that exceed the minimum program requirements.

When that happens, not only is the risk of flooding diminished, but flood insurance premium rates for all citizens of a community that accomplishes the goals are appropriately discounted to reflect the reduced flood risk.

To quote the program web page,

“For National Flood Insurance Program Community Rating System participating communities, flood insurance premium rates are discounted in increments of 5 percent.

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Boomergeddon vs Modern Monetary Theory (MMT)

by DJ Rippert

Saving America’s bacon. In 2010 Jim Bacon, blogrunner of this site, wrote a book titled Boomergeddon. The sub-title of the book is, “How Runaway Deficits and the Age Wave Will Bankrupt the Federal Government and Devastate Retirement for Baby Boomers Unless We Act Now.” The book is well written and contains considerable supporting detail but that sub-title pretty much sums things up. At the time of publication Bacon’s book amplified the conventional wisdom of the day — deficits are bad and, as our president might say, big deficits are bad bigly. That traditional belief has come under scrutiny lately. One leading critic of the theories espoused by Boomergeddon is Stephanie Kelton, an economics professor at Stony Brook University and former advisor to the Sanders campaign. Her new book, published in 2020, is titled, The Deficit Myth.  One paragraph from the description of Kellon’s book on Amazon.Com sums up her thesis vis-a-vis Boomergeddon. “Kelton busts through the myths that prevent us from taking action: that the federal government should budget like a household, that deficits will harm the next generation, crowd out private investment, and undermine long-term growth, and that entitlements are propelling us toward a grave fiscal crisis.” Kelton believes the United States has considerably more room to incur debt without causing economic harm and we should get about the business of incurring more debt. Paying homage to her Democratic-Socialist roots, Kellon sub-titled her book, “Modern Monetary Theory and the Birth of the People’s Economy.”

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The Trash Tax Returns; Energy Price Hikes Ignored

By Steve Haner

Proving once again how rare are the new ideas, Governor Ralph Northam’s proposed Special Session budget amendments resurrect a possible state-collected solid waste tipping fee, which crashed and burned in 2002 after being successfully tagged a “trash tax.”

The proposal calls for a study to be completed by November 1, laying the groundwork to include the new levy and substantial revenue when the Governor tweaks the budget again before the 2021 Regular Session. When former Governor Mark Warner proposed this, at the Veto Session following the 2002 Regular Session, it would have raised an estimated $75 million annually.

Frankly, what the language calls for (a plan) is something the Northam Administration can just do. By including this directive in the budget document, all the stakeholders are forewarned and forearmed. What’s the plan for the money? “The plan shall include recommendations for the amount and structure of any proposed fee, and recommendations for use of any revenue that may be generated from such fee.”    Continue reading

Northam Asks Legislators: Resist Urge to Spend

Governor Ralph Northam in an almost empty Pocahontas Building committee room, addressing legislators miles away. State photo.

By Steve Haner

Perhaps the most important point about Governor Ralph Northam’s latest Virginia state budget proposal is what he did not recommend. He did not recommend dipping into the state’s current cash reserves to restore spending items which had been frozen. No additional taxes are proposed.

In fact, Secretary of Finance Aubrey Layne told legislators in the budget briefing August 18 that no new budget bill is needed from this month’s special session at all, and the General Assembly could let the current document stand as approved in May until it comes back in January for the full 2021 regular session.

Whether Northam’s cautious, some would say conservative, approach will satisfy the General Assembly or spending advocates will be the story of the special session, at least on the financial front. The run up to the Assembly’s arrival was marked by escalating demands to address issues related to the COVID recession, and general complaints about poverty and income disparity in the Commonwealth.

“We have concentrated on building cash and limiting spending on recurring expenses. That is why I stated we do not need budget action from a financial standpoint. Let’s hope the General Assembly follows suit,” Layne wrote in reply to a question.

That is hardly guaranteed. The frozen spending amounts, more than $2.2 billion, represent some of the highest priorities of legislators (and the Governor himself.)  Most cannot be addressed by using the federal funds provided to respond to the COVID-19 pandemic. They could be funded in part by the more than $1 billion in cash reserves, divided between the official Revenue Stabilization Fund and the more informal Revenue Reserve Fund. Northam left those alone. Continue reading

Entrepreneurs, Rent Seekers and the Just Society

by James A. Bacon

It’s a lazy, rainy day, and for amusement, I’ve been reading Nassim Nicholas Taleb’s online work, “Principia Politica,” in which he applies his insights into risk, probability, and the non-linearity of complex systems to the realm of governance and politics. The graphic displayed above appears about halfway through the presentation without any elaboration but it beautifully summarizes how I view the world.

The left-hand image summarizes the thinking of the political left in the United States today, which defines “the rich” — the millionaires and billionaires, in Bernie Sanders parlance — as the enemy. The underlying assumption is that all wealth is, to one degree or another, illegitimately gained and that concentrations of wealth are harmful to society. This is the default mode of thinking of much of academia, the journalism “profession, think tank pundits and the nation’s intelligentsia.

The right-hand image summarizes the thinking of those, like me, of a conservative-libertarian bent. I have no problem with the existence of rich people in our society. I am far more interested in how people acquired their wealth. To me, predators, cronies and rent seekers are the bad guys. Continue reading

Do Summer Camps Warrant Bail-out Funds?

Camp Mount Shenandoah: less screen time, more time outdoors

by James A. Bacon

A philosophical question to ponder: If the Commonwealth of Virginia shuts down an entire industry by executive order to prevent the spread of the COVID-19 virus, what moral obligation does it have to help the businesses survive the epidemic?

Literally no industry in Virginia has been more impacted by the emergency shutdown than overnight summer camps. Summer camps do not comprise a particularly big industry — one guesstimate is that 75 establishments generate in the realm of $100 million a year — so they cannot be said be be economically “essential.” But they are essential, camp advocates say, for the mental health of thousands of Virginia kids, who need physical activity and social interaction.

Many industries have been slammed by the emergency shutdown. However, none but the summer camps have been entirely shuttered for all three phases. Camps generate 90% or more of total revenue from seven to 12 weeks during the summer, and if they are forced to close during that period, there is no way to make up for lost revenue. Continue reading

Saylor Invests a Quarter Billion in “Digital Gold”

Michael Saylor

It’s one thing for some geeks in a garage to spin up a new Bitcoin currency. It’s another when a sophisticated data-analytics company with nearly a half billion dollars in revenues dives in the cyber-currency. MicroStrategy Inc., one of Northern Virginia’s more prominent IT firms, has invested $250 million from its cash stockpile to purchase 21,454 Bitcoins.

CEO Michael Saylor is none too optimistic about the long-term future of the economy. Returns on its $550 million cash hoard are declining, and the dollar is weakening.

“Those macro factors include, among other things, the economic and public health crisis precipitated by Covid-19, unprecedented government financial stimulus measures including quantitative easing adopted around the world, and global political and economic uncertainty,” Saylor said. “We believe that, together, these and other factors may well have a significant depreciating effect on the long-term real value of fiat currencies and many other conventional asset types, including many of the assets traditionally held as part of corporate treasury operations.” Continue reading