Is Virginia Losing its Mojo?

For the third year running, Virginia ranks as Forbes Magazine’s “Best State for Business,” edging out Utah for the top spot. While the Old Dominion won the top spot two years ago with a slam dunk, its lead in 2008 was “razor thin,” with Utah and other states nipping at its heels.

Whereas the Old Dominion ranked in the Top 10 for all categories two years ago – regulatory environment, cost of business, labor, economic climate, growth prospects and quality of life – its standing has fallen markedly in “cost of business” and “growth prospects.”

The ranking by the business magazine is arguably the most prestigious of the all best-place-to-do-business ratings, so state officials justifiably crowed over the “three-peat” feat of garnering the top spot three years running. Said Gov. Timothy M. Kaine: “This best-in-nation validation speaks volumes to our competitiveness in today’s global market. It’s a real honor to receive this recognition from once, but to be named the ‘Best State for Business’ three years in a row is a true accomplishment for which we should all be proud.”

Virginia fared best – No. 1 — in the “regulatory environment” category, which incorporates measures of regulatory and tort climate, incentives, transportation and bond ratings. We fared well in economic climate (No. 6), quality of life (No. 6) and labor (No. 7), although we have slipped a notch or two in each over the past two years. (Compare the 2008 and 2006 rankings.)

But Virginia has suffered market deterioration in two of the six categories. Wrote Forbes reporter Kurt Badenhausen:

Driven by higher labor costs, business costs in Virginia jumped, and are now approaching the national average. The biggest factor closing the gap between Virginia and everyone else: lower growth projections for the next five years. On last year’s list, Virginia ranked eighth in our growth-prospects category. This year, lowered expectations for growth in jobs, income and gross state product knocked Virginia’s growth-prospects ranking down to 26th.

In the “cost of business,” which incorporates labor, energy and taxes, Virginia has slipped from No. 10 to No. 20 in two years. Badenhausen attributes the decline in ranking to higher labor costs, which does cut two ways. If labor costs are going up, it may be hard on business, but higher wages and salaries are a benefit to employees and taxpayers. If this is bad news, I’ll take more of it.

Meanwhile, the “growth prospects” category has fallen even harder over the two past years, which is a bit of a paradox: If Virginia has been such a great state — the very best in the country — in which to do business for three years running, how come its growth prospects have dropped from No. 10 to Nov. 26?

Lamentably, Forbes provides no explanation for the lowered expectations for growth in jobs, income and gross state product. What’s going on? Is the Northern Virginia economic engine slowing down, reflecting the inevitability that federal spending, which has buoyed the regional economy, cannot sustain its post 9/11 growth rate? Or is the problem downstate, to be found in the failure of downstate metro areas to adapt to globalization and the knowledge economy?

For Virginians, the ranking raises as many questions as it answers. But the way the trends are heading, don’t be surprised if we get knocked off our perch next year.

(Cross-posted with R’Biz.)

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  1. E M Risse Avatar
    E M Risse

    Now factor in the fact that to achieve a sustainable trajectory Virginia — and every other justidiction on the planet — must find a way to intelligently REDUCE “growth” and you have even harder problems to solve.


  2. Anonymous Avatar

    “how come its growth prospects have dropped from No. 10 to Nov. 26?”

    Might have something to do with attitudes like EMR’s. Even if you don’ have regulations in place that tip the regulatory scale, thee is still wide latitude for public officials to slow things down generally and make life hard for anyone who wishes to accomplish something.

    Any moron can appear to be more sustainable by doing less – reducing growth as EMR says. The problem is that such a plan is no more sustainable than unbridled growth. Reducing growth inevitably means you have to decide who you are going to cut out of the loop, and they are not going to see such a plan as “sustainable”.

    The real trick is how do you have sustainable and equitable growth, not to simply eliminate it for others for your own selfish benefit.


  3. Groveton Avatar

    What is the classic definition of a recession? Two consecutive quarters of negative GDP growth. A recession is defined by a lack of economic growth. Anyone who thinks recessions are good needs to have their heads examined. Of course, if you are trust fund preppie in Richmond drinking gin and tonic at the Country Club of Virginia, maybe it doesn’t matter.

    Virginia is sinking like an anchor. Its universities are falling in the ratings, its growth prospects are dimming. The Descendants have done it again. They have parlayed their inbred stupidity into pain for the citizens. From ruining the soil by overplanting tobacco to missing the industrial revolution. From being the center of an immoral and unwinnable war to Jim Crow. From Massive Resistance to failing to build the infrastructure necessary for a stable economy. From squandering the tobacco settlement to “we ain’t payin’ fer no NoVA roads”.

    Virginia’s centuries old pattern of failure is about ready to repeat. And it is because of an incompetent governance process populated by inept politicians. Someday there will be enough out-of-staters and foreign born (legal) residents of Virginia to break the hold that this Confederacy of Dunces has on the state. The first thing that the Northern liberals, out of staters and foreigners will say is that economic growth is critical to citizen happiness. Of course The Descendants won’t listen. They were born with a silver foot in their mouths. But a long period of economic stagnation along with modern communication capabilities might finally convince the people of Virginia to question the persistent failures of its entrenched political class.

  4. Anonymous Avatar

    I have worked as a journalist on such surveys for national and regional magazines and have to note just how bogus they are.
    One big mag had us chasing after yet-to-be-built subdivisions in Southern Calfornia as a candidate for its best places to live and launch a biz. Virginia Business’s annual “Rich List” is a real joke because its owner shells over a few peanuts to pay for it.
    I don’t think I would take Forbes very seriously.

  5. Jim Bacon Avatar
    Jim Bacon

    Groveton, You and I share a deep distrust of existing institutions in Virginia. This state has had many failings in the past, and continues to have failings — I wouldn’t have named this blog Bacon’s “Rebellion” if I didn’t agree with that. But I think you cloud the origins of these failings if you blame them all on the “Descendants of Pocahontas.”

    It is no mean accomplishment to be named as the Best State for Business three years running (even if we seem to be slipping a bit). In terms of governance, Virginia also ranks consistently among the two or three best-run state governments in the country, according to rigorous standards applied by Governing Magazine.

    These are no mean accomplishments. Surely Virginia is doing *something* right. As inept as Virginia’s political class is in many ways, we must remember, the political class in *every* state is parochial, myopic, corrupt and/or tied to Business As Usual to some degree. Our political class, as bad as it is, is arguably less awful than the people who run the other 49 states.

    Don’t read that as an apology for lazy thinking and lethargic execution in public policy. Our job as citizens is to keep the politicians’ feet to the fire. Our job on this blog is to subject the decisions of the political class to rigorous and withering scrutiny.

    But it doesn’t add clarity to our understanding of Virginia’s political economy — who runs the state, what special interests and constituencies call the tune, who’s buttressing the status quo and who’s fighting for change — by making blanket characterizations about the “Descendants of Pocahontas” for failing to solve problems that have eluded solution in every state in the union.

    Some of your soap-box oratory is very funny — when you get cranked up, you spit out the most entertaining writing to appear on this blog — but this “Descendants of Pocahontas” business really doesn’t add any clarity to the situation.

  6. Anonymous Avatar

    Oh for pity’s sake — Virginia gets best state for business 3 years running in an evironment of declining resources and a weakening economy — and what’s the reaction on the Bacon Blog? Bet we won’t make it to four! We must halt growth! The state’s sinking like a rock! Those polls and ratings are bogus! Our elected officials are stupid and corrupt!


  7. Groveton Avatar

    OK Jim – let me add some clarity to the situation. I have a different view of Virginia’s history than you have. I have read Virginius Darby and the other well known historians of the Old Dominion and I think I see a pattern. Here are the basics:

    1. Virginia’s original European settlers were Englishmen. In fact, they were a rather few Englishmen who (on occasion) intermarried with the Native Americans. The most noteworthy of these marriages was between Pocohontas and John Rolfe. Many of these settlers were English nobility and were give land grants by the King. They became what was called the southern aritiocracy in the colonies.

    2. As Virginia developed as a colony a small group of families came to dominate the government, business and theologiocal affairs of Virginia. These families have, at least in modern times, described themselves as “Descendants of Pocohontas”. They also describe themselves as “the first families of Virginia”. These families were concentrated in Norfolk but moved to Richmond as Virginia’s capital moved. They understood all too well that being close to the seat of government helped ensure a disproportionate share of the state’s wealth would go to themselves.

    3. These “first families” were never particularly good leaders although they certainly knew how to maintain power – by hook or by crook. They pushed Virginia in one direction and then another as the citizens of the state went from boom to bust following the vagaries of the tobacco harvest.

    4. The “first families” were, by and large, Tories. The English monarchy granted them their priveleges and they reponded with loyalty to the crown.

    5. The founding fathers were not among the “first families” of Virginia. They did not claim to be descrnded from Pocohontas. They did not live in Richmond. By and large the founding fathers were the men from what was then the hinterland of Virginia – Charlottesville (Jefferson), Fairfax County (Washington and Mason), Orange (Madison). They were rebelling not just against the King but against the King’s agents in the colonies. They were, in part, rebelling aginst the “first families” of Virginia and their royal entitlements.

    6. After the rebels won the Revolutionary War the real leaders of the Revolution – Jefferson, Mason, Madison, Washington – assumed positions in the national government. Through the Constitutional Convention and the census of 1790 Virginia maintained a dominant role in the new United States. But the seeds of decay were sown. The real leaders were in the national government leaving the state back in the hands of the “first families”. And these “first families” quickly went back about the all important business of enriching themselves at the expense of Virginia’s future.

    7. The “first families” were (and remain) traditionalists. They don’t like change. From their perspective this is understandable. By the early 1800s these familes had dominated the most important colony (now state) in the US for hundreds of years. Change was a threat. Change was their enemy. Those new fangled manufacturing devices being made in England had no place in Virginia. Slaves toiled in the fields under the supervision of the poor white overseers and the poor white overseers worked for the “first families”. This plantation economy benefited the “first families” and they saw no good reason to deviate from it. As would become their hallmark, they failed to grasp the big picture preferring to fall back on their odd sense of genteel manners and propriety. Virgina lagged as the rest of the nation moved forward.

    8. As the world and then the United States began to finally understand the true horror of slavery the “first families” found they had a problem. Unable to grasp either the global revulsion to slavery or the impending automation of agriculture the “first families” thought their 300 year old economic stranglehold on the state of Virginia might be coming to an end. They couldn’t imagine a future that was any different from the past and this guy Lincoln was trying to undo the “instituition” of slavery. So, the “first families” had a real problem. If they said they wanted to fight a war to preserve slavery they couldn’t raise an army. The vast majority of white people were poor and had no expectation of ever owning slaves or a plantation. Why would they fight for the wealth of a very small percentage of the population? They wouldn’t. So, the “first families” engaged in some old fashioned propoganda. They claimed that this was a war for “states rights”, a war of “Northern aggression”, it was the “second Revolution”. The poor and poorly educated whites marched off to war. A war to preserve the economic status of the state’s “first families”. A war that the South could not win. A war from which many would never return.

    9. Utterly defeated in war with thier personal economic engine (i.e. the state of Virginia) in a shambles, the “first families” sought to disenfranchise the state’s former slaves lest the “first families” lose even more of their economic power. For a while they had to contend with Yankee management of the state. The Underwood Constitution of 1870 established black sufferage, provided for public schools and mandatory attendance for all children. The “first families” tried to resist by first refusing to vote for delagates and then by ridiculing the proposed Constitution as the “Negro Constitution”. However, Virginia was under military rule and the “first families” were outflanked. During this brief moment of hope the constitution was approved by a vote of 210,585 to 9,136. It became the law of the land. The Readjuster Party sprang to life with a new vision for Virginia’s future. Its stated goal was to “to break the power of wealth and established privilege”. It’s brief but bright time went from 1870 to 1883. After that, the Conservative Democrats took control and kept it for the next 80 years. This recidivist group was a “who’s who” of the first families of Virginia including Barbours, Martins and Byrds.

    10. Unfortunately for Virginia, the Yankees left. Naturally, the “first families” regained control. By 1902 they had consolidated control to the point that they were ready to rewrite the 1870 Constitution and disenfranchise the African American residents of the state. Poll taxes and literacy tests all but eliminated the black vote. In fact, the literacy test also cut deeply into the poor white vote. The 1902 Constitutional Convention began with a pledge that the new constitution would be put to a popular vote. This pledge was quckly discarded as the “first families” realized that a constitution designed to disenfranchise all the African Americans and many of the white Virginians wouldn’t pass a popular vote. So, the political elite passed the 1902 constitution with no popular vote. This abomination would remin in force longer than any other constitution passed by the state. One of the hallmarks of this “declaration of war against the people of Virginia” was the segregation of schools.

    11. By this point the “first families” were firmly back in control. They waved Confederate flags as they put the “recent unpleasantness” behind them. This recent unpleasantness included a war to preserve an abomination, the deaths of thousands and thousands of Virginians, the almost total destruction of the state and a complete economic collapse.

    12. The period from 1902 to 1954 was something of a “Golden Era” for the “first families”. They ran the state through the Byrd Machine. Their power was unrivaled in any other state. They formed the high society of Richmond and their children went to lilly white schools. Meanwhile, the poor whites and blacks of the state faced a lack of economic opportunity and an essentially non-existant educational system.

    13. The 1950s and 1960s were a stressful time for the “first families”. Brown vs. the Board of Education forced the issue of segregated schools to the forefront. Harry F. Byrd (a proud member of one of Virginia’s “first families”) declared his policy of massive resistance. The Civil Rights Act of 1964 proved that a Southerner (Lyndon Johnson) could put aside racism and do what’s right for America and Americans. However, the political elite in Virginia proved that there were still plenty of people who couldn’t come to grips with the “all men were created equal” philosophy of those long dead patriots from the hinterland of the state. So, the politicians closed the schools rather than see their children attend class with kids of African descent.

    14. Like slavery and the Civil War the “first families” couldn’t stop progress no matter how hard they tried. The federal government was once again stepping into Virginia politics to put a muzzle on the immoral behavior of the state’s political elite. In 1964, the Supreme Court upheld an order requiring that the Prince Edward County Public Schools be re-opened. Faced with a choice of prison or intrgrated schools, the politicians decided they could live with integration. Sort of. It was not until 1986 that the final chapter in Richmond’s court mandated desegregation battle was closed. The “first families” had lost and lost big. But they had lost before and come back and that’s what they intended to do again.

    15. The Virginia Constitution of 1971 was born of civil rights legislation at the federal level. Gone were the days when a small group of power hungry “first families” could railroad a racist constitution through the convention and have it adopted without a popular vote. The new constitution was a major step forward in providing fair and equal treatment to most of Virginia’s citizens. However, it still allows plenty of “wiggle room” for the shady deals and favoritism that keeps the “first families” afloat.

    16. Virginia was one the pre-eminent British colony in the NEw World. It was, in the early days of the United States, clearly the pre-eminent state in the union. However, those early advantages were squandered by a narrow group of political elites who publicly describe themselves as the “first families” of Virginia. This list does not include names such as Jefferson, Madison or Mason. However, it does include names like Byrd and Dabney, Fitzhugh and Warner. Virginia’s fall from prominence was swift and catastrophic for a large portion of the state’s population. Now we are reduced to hoping that a business magazine will rate us the best state for business.

    What a shame.

    For a full list of the “first families” of Virginia:

  8. Jim Bacon Avatar
    Jim Bacon

    Groveton, This is a fascinating narrative. When you retire, you should write a revisionist book of Virginia history along these lines. It’ll be a best seller. I suspect that you will have to cherry-pick a fair amount of information to make all the pieces fit, but there will be enough truth in the narrative that you’ll be able to conduct radio interviews around the state with a straight face.

    Here’s where I have a problem: Whatever power the “Descendants of Pocahontas” might have had during the Byrd era, their power has been diluted to insignificance. To speak of the “Descendants of Pocahontas” in Northern Virginia today, with that region’s massive population influx over the past five decades, would be ludicrous. Even you would agree with that, wouldn’t you? While the good ol’ boys may maintain some influence at the courthouse level — no one else has lived in the region long enough to care about local government — the business elites and bankrollers of the local politicians are almost uniformly non-“Descendants of Pocahontas.”

    Richmond is supposedly the center of Virginia “blue bloods,” and there are indeed a few of them still left. But not many. Even this conservative city has seen such an influx of outsiders, and so much new wealth created, that the “Descendants of Pocahontas” are little more than a remnant. Look at the leaders of Richmond, and you’ll see a few “Descendants” but not many. The Ukrop brothers (Ukrops Super Markets) are descended from Czech immigrants who started a grocery store before WWII. The Robins family (the old A.H. Robins pharmaceutical company) stems from a family patriarch who ran a drug store before WWII. Bill Goodwin (sundry investments) grew up poor in Southside Virginia. Gene Trani (VCU president) moved to Richmond about 20 years ago.

    One of the few “old” Virginia families is the Bryan family, which controls Media General (which owns the Times-Dispatch). I have no idea if the Bryans trace their ancestry to Pocahontas, but they definitely go a long way back. Stewart Bryan, the last of the line, has relinquished executive power of the company, and once he’s gone, no one from his line will fill his shoes. Marshall Morton, the new CEO, came up from South Carolina. Likewise, any serious “tobacco money” that is left in this town belongs to CEO Michael Szymanczyk — I’m just guessing, but I doubt “Szymanczyk” can be found in the Wikipedia list of first families of Virginia. I could go on and on about the influence of Capital One and the other Fortune 500 companies in recruiting outsiders to Richmond, but I don’t have time. You’ll just have to trust me on the point.

    The “Descendants of Pocahontas” may have been a sociological and political force in Virginia at one time, but the idea that they control anything anymore is just a fantasy!

  9. Larry Gross Avatar
    Larry Gross

    As I recall from my limited Marine Corp “brat” education.. there were 13 colonies configured similarly to Virginia though perhaps Mr. Bowden can help clue me and the rest of us in…. on this…

    but Groveton.. I have a friend who has moved to New Mexico and he was interested in local politics and in New Mexico – if you do not have multi-generational Hispanic blood, landed-gentry – you are forever a “come here”.

    sound familiar?

    but anyhow.. how did the other 12 colonies find “enlightenment” and Virginia managed to stay mired in Pocahantassville?

  10. Groveton Avatar

    Maybe you guys are right. Maybe, after 400+ years of domination, the “first families” have disappeared in the last 40 years (Harry F Byrd died in 1966). Of course, Harry F. Byrd Jr represented Virginia in the US Senate until 1983, so … maybe 25 years is more like it. One of Harry F Byrd Jr’s sons, Tom Byrd, became publisher of the Winchester Star. Another son (Harry III) is Chairman of the Board of the Winchester Medical Center and its parent – Valley Health Center. The Byrd family was recently profiled in Virginia’s Top 100 as having a net worth of $100M+.

    But there sure are a lot of coincidinces. Tim Kaine is married to Linwood Holton’s daughter. Warner is the sur name of one of the “first families”. Chuck Robb married Lyndon Johnson’s daughter. Jim Gilmore seems to have no connection to the “first families” but he’s got friends in high places. The Republican Party of Virginia decided to hold a convention to determine its Senate nominee rather than a more democratic primary. A primary would have put Tom Davis in strong contention becuase of his popularity in NoVA. But the RPV decided on a convention that got Gilmore the nomination. And who is pulling the strings at the RPV? Is it really Jeff Frederick, the 32 year old politician from Prince William County?

  11. Groveton Avatar

    And Jim – I’d love to write a history of Virginia when I retire. The one really authoritive history was written by Virginius Dabney. And Dabney is … you got it, one of the first families of Virginia. What was it Hitler said? The winners write the history books.

  12. E M Risse Avatar
    E M Risse


    A lot of fun stuff!

    Back in the day the DoP and the VFF were known as “The Main Street Boys.” Be sure to include them in your history.

    You noted — we assume in response to our note on the need to cut growth anad consumption to obtain a sustainable trajectory — as follows:

    “What is the classic definition of a recession? Two consecutive quarters of negative GDP growth. A recession is defined by a lack of economic growth.”

    Rigth on.

    “Anyone who thinks recessions are good needs to have their heads examined.”

    Perhaps, but there are a growing number who think that is the case.

    So, tell us if the problems are unsustainable levels of consumption of nonrenewable resources, massive imbalance of trade, huge private and public debt, etc.,;

    How does a society obtain a sustainable trajectoy other than by cutting consumption?

    No one said it would be fun.

    But should our leaders not thought of that in 1973 when the resources existed to chage course without belt tightening?

    “Growing” ones way out of over consumption is like building ones way out of the Mobility and Access Crisis.

    No way DoP, VFF or no.


  13. Groveton Avatar


    I find it difficult to hope for a recession. Recessions always hurt those lower on the “food chain” more than those higher on the “food chain”. So, it would just make the wealth distribution problem worse.

    But I also think you are right about over-consumption. Since I started reading BaconsRebellion I have been far more sensitized to just how much is being consumed. As an example, I was recently at a party in Great Falls. As I stood around talking to some of the men of Great Falls the question of motorcycles came up. Someone said that there were probably 500 Harley Davidson motorcycles sitting in garages in Great Falls (unused). I thought it was a joke until the people around me started saying, “Yeah, I’ve got one in my garage”. By the time this informal poll ended it turned out that about 75% of those in the discussion either have or had a Harley Davidson motorcycle. None rode them much. They were just a toy that tickled their fancy once upon a time so the toy was purchased, ridden a couple of times, and put in the garage. I don’t know how much a Harley Davidson costs but it must be pretty expensive.

    Given the amount of consumption and the amount of consumer debt and the mortgage crisis that was, itself, precipitated by over-consumption – are our sales taxes high enough? The United States has a very low total tax rate (as a percentage of GDP). The following table illustrates this:

    I have been to most of the countries on the list. I see no relationship between the percent of taxes paid and the happiness of the people living in that country. I also don’t see much of a relationship between low taxes and standard of living. Unless, of course, you count all those Harleys sitting unused in the garages of Great Falls as a measure of the standard of living.

  14. E M Risse Avatar
    E M Risse


    Thank you for that post.

    It is refreshing to hear someone who is also in business put forward those observations.

    You are absolutely right about the recessions hurting those at the bottom of the food chain — the bottom of the Ziggurat.

    Two points:

    Note what happened to the Wealth Gap during the depression per the graphic in our column of 7 July (“The Wealth Gap”).

    It was folks like my Grandfather who sold out to General Motors who lost the most. Yes, my parents suffered — never got a dime from “The Old Gent” before the crash — but they survived and they provided a great start for my life.

    The other point is I challenge the whole idea of needing “growth” — and thus any calculation of “recessions” for citizens to be happy and safe.

    As we will try to articulate again this week, a comprehensive, an intelligently planned and widely supported reduction in consumption can result in a sustainable trajectory for civilization.

    A continuation of the current trends will yield a drastic crash. Soon or not long from now when there are even fewer resouces with which to build a better world.

    Keep up the good work.


  15. Anonymous Avatar

    The Constitution of 1971. Interestingly, some of the drafters of the new constitution asked a number of local officials in NoVA whether they wanted to remove the Dillon Rule in the new constitution. The answer was overwhelmingly “no.” The Dillon Rule permits irresponsible local decisions from local officials, while they continue to blame “Richmond” and “Judge Dillon.” Helps keep the state religion alive and well.

    Also, I still find it hard to blame the Descendants when the NoVA power crowd enables them to take advantage of NoVA.


  16. Jim Bacon Avatar
    Jim Bacon

    Speaking purely as an economist interested in economic productivity and inefficiency, let me make a highly unpopular point: Recessions are good.

    We don’t want them to last too long or hit too deeply, but recessions provide valuable functions in the capitalist economic system.

    (1) Recessions force Enterprises, Agencies and Organizations to make the tough decisions they evaded while times were good. A lot of uneconomic and unproductive activity gets pruned during recessions.

    (2) Recessions weed out the failed Enterprises, freeing up land, labor and capital to be used by other Enterprises that can utilize them to greater effect. (Too bad recessions don’t weed out Agencies. That’s one of the reasons why the private sector is so much more productive than the public.0

    (3) The cost cutting, retrenchments and bankruptcies collectively serve the function of reallocating land, labor and capital from low-performing sectors of the economy to high-performing sectors. If no one ever went out of business and no one ever lost a job, where would the growth companies ever find the employees, office space and expansion capital they need to succeed?

    Yes, recessions are painful for people who lose their jobs and investors who lose their savings, and it’s a lot easier to speak about their virtuous impact when you’re not the one who just lost his job. But the alternative is a society that tolerates a far higher level of inefficiency and a lower level of productivity and innovation.

  17. Groveton Avatar

    I think that the idea of “recessions are good” has more to do with poor management than economic necessity. Certainly failing companies need to go bankrupt and people will lose their jobs. Capital needs to be applied to the best idea in a market segment and new ideas may be better than old ideas – which will cause economic displacement. But this should and does occur during normal economic times. And the people who lose their jobs during normal economic times usually get new jobs after a reasonable period of looking. This is all quite normal and has been discussed extensively – usually in the context of Schumpeter economics.

    However, a systematic failure of a major economy is a different matter. These periods result in contracted spending, reduced investment and higher than structural levels of unemployment. They are necessary only to the extent that corporate and political management shirked their responsibilities during the normal economic times. It’s like a coronary bypass operation – necessary in extreme circumstances but less preferable than a regular regimen of diet, exercise and cholesterol / blood pressure management. By the time a person needs bypass surgery it’s usually a matter of life and death. In this sense, the bypass surgery is life saving. If an economy has to plunge into recession to gain efficiencies, the recession may be preferable to the depression that would ultimately occur if the recession did not a precipitate a level of traumatic and invasive economic cleansing. However, I believe a well managed economy can realize efficiencies without needing “once a decade” recessions in order to remain “in fighting trim”.

  18. Jim Bacon Avatar
    Jim Bacon

    Groveton, Your logic is seductive. I agree that a lot of creative destruction occurs even during periods of economic growth. Both job creation and job destruction are occurring all the time.

    However, capitalism — the best economic system ever invented but not without its flaws — has *always* been prone to business cycles. I’m not aware of any government anywhere that has done a good job of “managing” the business cycle. For a long time, people thought Alan Greenspan did a great job of “managing” the U.S. business cycle. But people aren’t quite so sure anymore. Prolong the cycle, and you just set yourself up for a bigger crash down the road.

  19. Larry Gross Avatar
    Larry Gross

    MJ – why would you assume that a disparity in housing prices is due to restrictive policies rather than simple supply/demand?

    You’ll never have a convincing argument until you are able to show some level of correlation due to specific restrictions.

    Otherwise, you’re just making an unsubstantiated claim – subject to misuse by both sides of the issue.

    If Comparing Loudoun with Chesterfield is too complicated, how can you possibly move on to much larger and much more complex urban areas to make such claims?

    Substantive information – validated information – would be invaluable to planners and localities – contemplating having tighter (or looser) restrictions.

    They could actually make more intelligent decisions if such data were available.

    Otherwise, all you’re going to have is one side demanding more restrictions and the other side opposing them… and the winner is whoever shows more people up at election time.

  20. Larry Gross Avatar
    Larry Gross

    my frustration on this goes to BOTH sides.

    The smarter growth folks use a similar non-metric approach in their advocacy also.

    In Tysons corner, we have the pro-developers claiming that density will be beneficial so they want less restrictions. The citizens who live there are afraid of adverse impacts so they do not want those restrictions loosened.

    If you’re not willing to measure – to use real metrics based on real data… to justify loosening restrictions – you basically are putting citizens in the position of having little recourse but vote out of office anyone who supports loosening restrictions.

    In other words, without convincing data, you virtually guarantee a political approach, often not without money being involved in ways that it ought not be.

    In both Loudoun and Chesterfield at the last election, incumbents were defeated – because of growth.

    Don’t you think that if it could be shown than more restrictions will result in the problems being claimed – that debate on those terms would have been to the benefit of voters and the public?

  21. E M Risse Avatar
    E M Risse


    I think your 3:59 and 4:08 posts were intended to go under “Land Use and the International Financil Crisis.”

    We will address them there.


  22. E M Risse Avatar
    E M Risse

    I tend to agree with Groveton, it should be possible, in a well regulated society, to avoid “Business Cycles.”

    When everyone comes to understand that while we may or may not live in an infinte Universe, we live on a finite planet with finite resources. Further for almost all of the 6 billion passengers on this space ship, THERE IS NO EXIT.

    With that understanding it should be easier to grasp the need for a better Balance between private rights and public responsiblities and thus better management.

    On the other hand, Jim Bacon forgets that we suggest in The Shape of the Future a way for stale Agencies to go out of business by putting the focus of governance on the largest scale of direct democracy — the Cluster.

    That plus recognition of the orgain comonennts of human settlement, term limits and sunset provisions better governance and only viable Agencies would have greater likelyhood of evolveing.


  23. Anonymous Avatar

    Tysons Corner — Fairfax County’s Comp Plan has a section on standards for Transit Oriented Development. They were adopted after great effort by county staff, developers and citizens groups. Essentially, they offer added density near rail stations.

    Here are some definitions from the Plan’s Glossary.

    “TRANSIT ORIENTED DEVELOPMENT (TOD): Transit-oriented development (TOD) in Fairfax County is defined as compact, pedestrian- and biking-friendly, mixed-use development containing medium to high density residential, office and retail uses within walking distance of certain rail transit stations identified in the Area Plans. Well-planned TOD should incorporate good design principles and an appropriate mix of uses around rail transit stations to promote transit usage and create vibrant neighborhood centers at these locations.”

    “TRANSIT STATION AREAS (TSAs): The Land Classification System category for areas adjacent to Metrorail Stations (or other future rapid rail stations) which are directly influenced by the presence of access points to the regional rail system. Generally, Transit Station Areas constitute those lands within a primary and a secondary development area. The primary development area is approximately a 5 – 7 minute walk of a station entrance. The secondary development area is approximately a 15 minute walk of a station entrance. In addition to these general guidelines, Transit Station Area boundaries are strongly influenced by the area’s access characteristics and the relationship of the station to surrounding stable neighborhoods.”

    Now,one might think that this policy might have guided the Tysons Land Use Task Force. But not anyone who follows the antics of the TLUTF. Some of the landowners simply don’t own parcels that are a 5 – 7 walk or even a 15 minute walk from the new rail stations. Can’t have that. So the Task Force decided to ignore the definitions and push density near bus stops and over-estimate how far people walk on a snowy January or stiffling August day.

    Jaded citizen attitudes towards development in Fairfax County were earned.

    Development at any density without adequate public facilities is contrary to the public interest.


  24. E M Risse Avatar
    E M Risse

    Development at any density without adequate public facilities is contrary to the public interest.”

    Absolutly right!

    You may think you have attended a lot of citizen task force meetings in Fairfax County but I will lay you odds we have attended a lot more. (1972 to 2002)

    And you know what? You are absolutely right about how bad things are.

    But that is not the issue.

    You and I agree if the current path is followed the result is disaster.

    We are talking about a new path that gets humans to a new and better place.


  25. Anonymous Avatar

    “Capital needs to be applied to the best idea in a market segment and new ideas may be better than old ideas – which will cause economic displacement. But this should and does occur during normal economic times.”

    And yet, as you describe it, much of the history of Virginia involves a strong central power devoted to preventing change.

    I think this may be the single most important factor in what appears to be Virginia’s slow decline (according to Forbes).

    We can argue about whether the Forbes ranking is meaningful, but presumably it used similar bases for each ranking. As a result we have one consistent and impartial measure to look at. May be it is anecdotal and maybe not, but when you have enough anecdotes, you have data.

    I think.

    If change is inevitable and new ideas are better than old, then resisting change must be bad, and the history of Virginia leads to badness. We need to learn to accept change.


    “…we live on a finite planet with finite resources.”
    “A continuation of the current trends will yield a drastic crash.”
    EMR must be of the same depression era experience as my mother. She has been predicting another catastrophic crash ever since I can remember. If EMR wasn’t married, maybe I could arrange a date.
    This is what I have described as the petri dish problem. Put a spot of penicillin in the middle and it expamds to the edge of the dish, wherupon you have a drastic crash. EMR’s solution is to draw a “clear edge” and preserve whaeteveer is outside of it. But by drawing a clear edge, you merely construct and artificial edge to the petri dish. And the result is that you have an artificial catastrophic crash that much sooner. Such a plan requires that you start making decisions about who will survive the crash and who won’t. As EMR says “for almost all of the 6 billion passengers on this space ship, THERE IS NO EXIT.”
    The only way out is if you “mine” the areas outside the clear edge in order to support those inside. But then you run smack into EMR’s argument about paying for your full locational costs. This implies that areas outside the clear edge are not being valued enough, as opposed to EMR’s argument, that areas inside are worth far more.
    We don’t have an economic system that can deal with the changes necessary. We need some new ideas.
    The second problem is that if you “mine” the resources outside the clear edge to support those inside, pretty soon you run smack back into the problem of limited resources, and you are back to square one. Whether you have a clear edge or not, sooner or later you have to decide who gets and exit from a catastrophic crash and who doesn’t. The clear edge just means you have to decide sooner.
    Probably, those at the top of the Ziggurat will have more options, unless we take them away. That is what EMR calls “a better Balance between private rights and public responsiblities”. Or, to put it another way, a “widely supported reduction in consumption can result in a sustainable trajectory for civilization.”
    Well, yes, but at a lower standard of living (fewer Harleys in the garage). How do you propose to get those at the top of the Ziggurat to agree to this kind of change? I doubt if it matters if they are descendants of Pocahontas or not, there is going to be a fight over redistributing wealth. It comes down to a matter of property rights. More “Public responsibilities” is just a polite (and indirect) way of calling for more public property rights at the expense of private ones.
    Nor will less consumption solve the problem. 10% less consumption and 10% more population means we use more resources, not the same amount. A sustainable trajectory for civilization has to land inside the edge of the petri dish. Even EMR has said we need fewer people consuming less resources. Now you have two major problems to solve: who is going to be “fewered” and who is going to be “lessened”? It seems to me that implies a rather severe INCREASE in the wealth disparity rather than a lesser one, particularly for those who get “fewered”.
    Not only do we not have a Political/Economic syystem that can deal with change, we aren;t even close to having an ethical system that can deal with the changes we face. Rising housing prices in the face of conservation are just one example.
    Eventually. Even the sun will burn out eventually. My Mom is still waiting for the second coming of the crash, and she may never see it. We are all interested in conserving something for our children: we want to give them a leg up on the Ziggurat. But I suspect we are less interested in preserving something for the 100th generation, and far less able to. The problem with focusing on conservation in terms of less consumption is that it paradoxically leads to lower prices, and therefore, more consumption. Rather than calling for more “balance between private rights public responsibilities” (public property rights), we need to define better what they are, so that they can be fairly traded. Then the market will set the balance.
    “If you’re not willing to measure – to use real metrics based on real data”
    You don’t need that. All you have to do is strictly define what are property rights: what you can own and who owns it. After that, the market will decide what is worth more or less, and when. Focus on the property rights, and the market will provide the data.


  26. Anonymous Avatar

    Due to recent budget cuts and the rising cost of electricity, gas, and oil, the light at the end of the tunnel has been turned off.

  27. Anonymous Avatar

    The lights being off must be the reason “RH” cannot read and makes no sense.

  28. Anonymous Avatar

    “At 9:52 PM, NoVA Scout said…

    Is Ray Hyde the most consistently intelligent and insightful guy in the Virginia blogosphere, or is it just my imagination?”

  29. Anonymous Avatar

    Don’t think the ecology/environment and economics are intimately related?

    “Any successful program of action on climate change must support two objectives—stabilizing atmospheric greenhouse gases (GHGs) and maintaining economic growth. Research by the McKinsey Global Institute and McKinsey’s Climate Change Initiative finds that reconciling these two objectives means that “carbon productivity,” the amount of GDP produced per unit of carbon equivalents (CO2e) emitted, must increase dramatically. “

    Or how about this?

    It’s typical for air quality to improve in a slow economy because people spend less on goods and services, said John Whitehead, an Appalachian State University environmental economics professor.

    As a result, there’s less energy demand. and that means less emissions.”

    “Even as Louisville has exceeded tougher new smog and soot standards on several days this summer, the air quality has generally been better this year.

    Still, the worst of the pollution season is yet to come. Higher energy costs and a slumping economy have reduced the amount of pollution generated by drivers and industry, who are reining in to cut costs. Better weather also is a factor in improved air quality readings.”

    “Bruce Traughber, the city’s economic development director and acting air pollution chief, told the Louisville Metro Air Pollution Board earlier this month that factors such as higher gas prices and manufacturing cutbacks were also likely playing a role in suppressing air pollution.”

    “Whelan said the closure of DuPont Performance Elastomers, which sent its work to the company’s plant in Louisiana, cost the area more than 200 jobs. But it also means losing the approximately 500,000 pounds of direct emissions that the plant produced each year.”

    People are already being “lessered” and “fewered”. This is a relationship (between the economy and the environment) that works both ways – unless we can actually achieve significant improvements in “carbon efficiency”, and in the long run, even that is a temporary fix.

    Is that easy enough to understand?


  30. Anonymous Avatar

    NoVa Scout:

    Just your imagination

    So what remote place do you want to develop for scattered dwellings?

  31. Anonymous Avatar

    Actually, I re-posted a kind remark Nova Scout made several years ago, just to indicate that not everyone thinks I’m inscrutable.

    I know I have ideas that seem strange, are unpopular, and counter intuitive. That doesn’t mean I’me working against the public interest, just because I favor individual interets.

    I just figure the public interest is the sum of the individual interests.



    “Most Americans recognize that while gas is expensive and our grocery money doesn’t go as far as it did last year, we are still an enormously prosperous and fortunate nation.

    In some countries, a depressed economic climate means mass unemployment, political instability and large-scale deprivation. “

    Another example of those who get “lessered” and “fewered” in a bad economy.

    Sure a bad economy is good for the environment. The question is whether we can afford it.


  32. Anonymous Avatar

    “Does Nancy Pelosi imagine that with so much of America declared off-limits, the planet is less injured as drilling shifts to Kazakhstan and Venezuela and Equatorial Guinea? That Russia will be more environmentally scrupulous than we in drilling in its Arctic?

    The net environmental effect of Pelosi’s no-drilling willfulness is negative. Outsourcing U.S. oil production does nothing to lessen worldwide environmental despoliation. It simply exports it to more corrupt, less efficient, more unstable parts of the world — thereby increasing net planetary damage. “

    Charles Krauthammer

    I almost never agree with Charles Krauthammer, but on this he is probably correct. We face the same kind of environmental and econmic trade offs every day, but we persist in thinking it is worth it – whatever the cost.


  33. Anonymous Avatar

    Significantly lower in gross state product. Why? Because most local governments in the major areas are doing all they can to stop development, and it causes local government to collect less revenue. Chesterfield County, the third-largest county in the state located south of Richmond, was down $40 million in property tax collections for the last fiscal year — before the real economic slowdown hit. Local governments haven’t figured out that when you shut down residential growth you shut down business. That’s what’s happening.

  34. Anonymous Avatar

    Anonymous is right. Some of the same jurisdictions that were complaining about growth previously are now complaining about the loss of income from proffers!

    But proffers are not proerty tax revenues. If you said property tax revenues did not increase as much as previously, then I would understand, but I don’t see why they would go down – all the existing property is still there.

    Unless there was a decline in the value of the property and that decline was reflected in a recent re-asessment.

    The other reason local governments collect less revenue has to do with license fees, BPOL taxes, meals taxes, beer sales, etc. all associated with the building trades.

    Promoting the economy and preserving the environment will be an economic tightrope.


  35. Anonymous Avatar

    There are people who actually think about such things, and attempt to measure them.

    “My friend Matt Kotchen asked over lunch what I thought were the top issues in environmental economics these days. I sat down and thought about this and here are my top 5. They are not in order;

    1. How large are learning by doing effects for renewable energy technologies such as wind and solar?

    2. How much damage will we suffer from climate change if average world temperature increases by T degrees? Where T takes on the values 1, 2, 5, 10, 30 c? Marty Weitzman’s point is that each of these states of the world have non-zero probability of taking place. So, how much damage and who suffers the damage from each of extreme weather events?

    3. When carbon pricing is introduced, which industries, nations and households will bear the incidence of this taxation?

    4. Are consumers indifferent between “natural capital” and man-made engineered products? So for example, think of gentically modified foods versus organic foods — are you indifferent? Is there any price differential such that you would be indifferent or do you view the GMO as “frankenfoods” that you wouldn’t touch?

    5. What are the causes of environmentalism? When people are environmentalists how does this affect their answer to #4 above?

    6. Building on #5, we need structural consumer demand estimates of the willingness to pay for “green” products (think of the Prius) or tofu and how these estimates vary by population demographics and ideology.”

    Mathew Kahn


  36. Anonymous Avatar

    “Growing” ones way out of over consumption is like building ones way out of the Mobility and Access Crisis.”

    Well, maybe, but there are other opinions.

    “…we argue that sprawl is not the result of explicit government policies or bad urban planning, but
    rather the inexorable product of car-based living. Sprawl has been associated with significant improvements in quality of living, and the environmental impacts
    of sprawl have been offset by technological change.”

    “At first, people continued to work in cities but lived in sprawling suburbs. But the jobs followed the people and now
    metropolitan areas are characterized by decentralized homes and decentralized jobs. In
    2003 America, urban growth and sprawl are almost synonymous and edge cities have
    become the dominant urban form.”

    “First, despite the pronouncements of academic theorists, dense living is not on the rebound. prawl is ubiquitous and expanding. Second, while many factors may have helped the growth of sprawl, it ultimately has only one root cause: the automobile.
    Suburbia, edge cities and sprawl are all the natural, inexorable, result of the technological
    dominance of the automobile. Third, sprawl’s negative quality of life impacts have been
    overstated. Effective vehicle pollution regulation has curbed emissions increases
    associated with increased driving. The growth of edge cities is associated with increases
    in most measures of quality of life. Fourth, the problem of sprawl lies not in the people
    who have moved to the suburbs but rather the people who have been left behind. The exodus of jobs and people from the inner cities have created an abandoned underclass whose earnings cannot support a multi-car based lifestyle.”

    Mathew Kahn and Ed Glaeser.


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