As noted in the previous post, the Tobacco Indemnification and Community Revitalization Commission has spent more than $400 million over the past decade — and has the capacity to spend $60 million annually for many years to come — in promoting economic development in the tobacco-growing regions of Southside and Southwest Virginia.
The original hope of those who set up the fund was to find a way to “transform” the economy of Virginia’s poorest regions, to pole vault the hamlets and mill towns into the Knowledge Economy Ireland style. Towards that end, the Commission has invested heavily in making high-speed Internet access more accessible and on a slew of educational initiatives. But the Commission also has spread around a lot of money on local, patronage-like projects as well as incentives to entice traditional manufacturing investment. A decade later, the region has diversified its economic base to some degree, but still remains highly dependent upon light manufacturing and resource extraction.
It is politically suicidal for the leaders of Southside and Southwest Virginia to ask the question that must be asked, so I will ask it: Are the economies of Southside and Southwest Virginia even salvageable? Has the the Commission squandered hundreds of millions of dollars keeping the region hooked on its old economic model? Would it make any difference even if the Commission changed its strategic emphasis, as a recent report suggests, to education?
Here’s the problem: The United States’ competitive advantage in the global economy resides in knowledge-intensive industries that leverage productivity and innovation. To compete, businesses need employees with high levels of skills and education. To recruit a workforce, successful businesses must locate in proximity to large labor pools — i.e., large metropolitan areas. (The only partial exception to this rule is that some corporations are willing to locate near university towns that provide access to unique knowledge sets.)
Not only are businesses biased towards locating in large metro areas, but many cutting-edge businesses locate in particular metropolitan areas where they can join industry clusters in which highly industry-specific industry knowledge can be shared.
Not only do Virginia mill towns — like all mill towns across the United States — lack the size to create knowledge-intensive labor pools… Not only do they lack the business clusters that support industry-specific innovation, for the most part they lack the amenities required to recruit, retain and remunerate highly educated employees. As Richard Florida observes, the creative class is heading where the wealth-generating opportunities are — and they’re not in tiny mill towns.
The Tobacco commission simply has not come to grips with this problem. But even if it did, even if the commission followed the advice of its blue ribbon study panel and invested more heavily in education, it wouldn’t make much difference. The vast majority of newly educated residents of Southside and Southwest simply would emigrate to metro regions where they could utilize their skills and make more money.
I would add one additional perspective that the Tobacco Commission has steadfastly refused to consider: the critical importance of human settlement patterns. Virginia’s mill towns support a highly dispersed population — living in small towns, strung along country roads, in remote cul de sacs — that entail long commutes to manufacturing facilities located in industrial parks with highway access. That pattern was affordable when energy was cheap. But that low-density pattern is crippling to local living standards in an era of expensive energy. To my knowledge, the commission has given no thought whatsoever to encouraging more compact, less dispersed settlement forms.
Furthermore, the low-density pattern of 50-acre farmettes, a few head of cattle and a small patch of tobacco, which factory workers supplemented their wages with farm income, has no allure to the creative class. (Urban refugees who dabble in farming seem inclined toward horses and vineyards.) To have any prayer of attracting/retaining an educated population, the Commission must pay more attention to creating the kinds of communities where educated people want to live.
Politically, the Tobacco commissioners can never throw up their hands and say, “We give up. All is lost.” But they should heed the advice of their blue ribbon commission to stop frittering resources on tiny patronage projects that support a few jobs temporarily but fail to achieve lasting transformation. The regions’ only hope is to concentrate resources in creating economically viable magnets within the region. It is possible — not likely, but possible — that cities and towns like Danville, Martinsville and Bristol/Abingdon have sufficient size with sufficiently large labor pools of skilled, educated labor that they could be attractive to businesses seeking respite from the high costs and dysfunctional human settlement patterns of the large metro regions.
The strategy of supporting “urban” economic activity (primarily manufacturing) in dispersed, low-density human settlement patterns across thousands of square miles becomes less and less viable with every increase in the price of gasoline and the steady migration of the creative class to large metropolitan areas. Until the Tobacco commission abandons that delusion, its cause is futile, and its leaders peddle false hope to the people they serve.
