Gov. McDonnell announces his jobs agenda. Lt. Gov. Bill Bolling, the state's jobs czar, stands behind him.
by James A. Bacon
Gov. Bob McDonnell has released his legislative agenda for economic development, calling for a $36.8 million mix of initiatives over two years, including $10 million for life sciences, $4 million for Wallops Island, $4 million for advanced manufacturing and $4 million for non-course credits at community colleges, plus a grab bag of tax credits and program increases. (Read the press release here.)
Before I launch into an explanation of why I am so underwhelmed by this patchwork effort, let me offer a few modest words of encouragement. First, McDonnell’s heart is in the right place. He should make job recovery a top priority of his administration. Second, he has held the line on tax increases, which is critical for maintaining a positive business climate. Third, he has not proposed any major legislative initiatives (that I can think of) that will impose new regulatory burdens on business. Fourth, this announcement does not include his transportation or higher ed agenda, which I don’t necessarily endorse but both of which are clearly geared toward job creation. Fifth, in a totally hypocritical violation of my principle that government should not pick winners and losers, I support whatever it takes to develop Wallops Island into a major commercial space launch facility.
That said, it is difficult to imagine that breaking $36.8 million into 19 programmatic pieces and spreading around the crumbs over two years will make any material contribution to job creation. Moreover, there is no sign that McDonnell has conceptualized anything approaching a broad vision for economic development. His strategy amounts to parceling out more money to narrow-bore programs like the Motion Picture Opportunity Fund and the Virginia Winery Distribution Company without any thought to the bigger picture. Every traditional economic-development constituency gets a piece of the pie: tourism, industrial recruitment, agriculture and forestry, small business, community colleges, and the like.
What is the McDonnell planning missing?
Creative class. There is not so much as a glimmer of recognition that the driving force of economic development in a globally competitive, knowledge-intensive economy is what geographer Richard Florida refers to as the “creative class,” the 30% or so of the population that is engaged in scientific, artistic and entrepreneurial pursuits and complex problem solving. These people drive innovation and wealth creation. The surest path to creating more innovation, wealth and jobs is to do a better job of recruiting and retaining these creative people, which means building the kinds of communities where they like to live. But no program exists to advance this goal nor is there a bureaucratic constituency to lobby for it, therefore economic development policy in Virginia plods along oblivious.
Human settlement patterns. As I have argued ad nauseum, there are fiscally efficient human settlement patterns and there are fiscally inefficient human settlement patterns. There are types of communities where people (especially the creative class) pay a premium to live and communities where people choose to inhabit only when real estate prices are depressed. Admittedly, land use is a local prerogative. But the state does drive transportation and other investments that help shape land use. The McDonnell administration has given zero attention to the idea of creating more livable and sustainable communities.
Health care. Rising health care costs are bankrupting the nation, bankrupting state governments, bankrupting businesses and bankrupting individuals. Which is no surprise, considering that the U.S. health care system bears little resemblance to a market economy. Among the most obvious deficiencies, there is no price transparency in medical procedures. The absence of price signals distorts the market in ways too innumerable to describe here. As the administrator of Medicaid, a regulator and a major purchaser of employee health insurance, the state should take the lead to create the conditions for a market-driven health care system. If the McDonnell administration has taken any measures in this direction, I have yet to see it.
Education. Education is critical to building human capital. The Old Dominion’s educational system is inadequate to the task of elevating Virginia’s students to the next level of educational achievement. McDonnell has proffered some modest measures — more money for higher ed, more virtual learning — but they tinker on the margins. We need to dynamite the traditional educational system and build one anew.
