Show Me the Money, Virginia. What You’re Doing Is Not Paying Off.

Show me the money, Jerry.

by James A. Bacon

Virginians need to wake up and realize that scoring a No.1  or No. 2 ranking on Forbes Magazine‘s “Best States for Business” has very little correlation with actual economic performance. It’s a nice sobriquet but as Cuba Gooding Jr. said in the movie Jerry Maguire, “Show me the money.”

When it comes to such measures of economic well being as number of jobs created, wage/salary levels and growth in high-tech jobs, Virginia’s so-called Golden Crescent  is not exactly gleaming. According to the Milken Institute’s recently published “Best Performing Cities 2012,” the Washington region (which includes Northern Virginia) logged a very respectable No. 5 ranking among the nation’s 200 largest Metropolitan Statistical Areas (MSAs) in 2012, but Richmond came in at 68, Hampton Roads at 139 and Roanoke at 142.

If you deem Washington’s outlier performance as an artifact of unsustainable federal spending — the Milken report says that Fairfax County could lose 87,000 jobs, or 13% of its workforce, from looming budget cuts — those rankings for the locomotive regions of Virginia’s economy are not remotely consistent with the “best state” in the union for business.

For what it’s worth, Virginia’s smaller MSAs did turn in a respectable performance last year. Charlottesville ranked No. 11 among the 179 small MSAs tracked, Harrisonburg 22, Blacksburg 32, Danville 49, Winchester 67, and Lynchburg 72 — every one outperforming the national average. Notably, the top three are all college towns. Even Danville, which has long been the poster child for failing Southern mill towns, looks like it may have turned the corner. (Hat tip to Hamilton Lombard.) That’s all very encouraging but the smaller metros, collectively speaking, figure less than even the smallest of the big three metros (Richmond) in economic impact.

Bacon’s bottom line: As Tom Petty once crooned, it’s wake-up time. Unfortunately, everyone is still asleep. Outside of the most poverty-stricken regions of Virginia, I detect no concern that anything might be awry. I believe that the problem emanates from the top. The governor’s office (not just for the McDonnell administration but every administration preceding it) publicizes positive recognitions such as the Forbes Magazine ranking and positive developments such as new plant openings while downplaying the negative. The emphasis on good news is intrinsic to the office. After all, every governor wants to make himself look like a success, not a loser.

But the problem runs even deeper. The people serving four years in the governor’s office are rarely experts in economic development. They are largely captive to the state’s economic-development institutions — the Virginia Economic Development Partnership, the Tourism Office, the Department of Agriculture, the Department of Business Assistance and the like — whose career administrators (a) naturally and understandably want to put a positive spin on the job they are doing and (b) are unlikely to call for radical new thinking about economic development that might siphon resources to other priorities.

And even deeper… Virginia’s business and civic leaders are slaves to the mid-2oth century paradigm of economic development embodied in the “Best States for Business” methodology. Rather than push for more innovative approaches to economic development, they lobby for more spending on transportation, more spending on schools and higher taxes on everybody but themselves to pay for it. Virginia’s sluggish performance represents a collective failure.

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6 responses to “Show Me the Money, Virginia. What You’re Doing Is Not Paying Off.”

  1. DJRippert Avatar

    When I first read this column I was certain that we’d been hacked. But a quick check of the WordPress log confirms that this column was indeed written by Jim Bacon.

    Jim, welcome to the other side of the street!

    Virginia is poised for an epic comeuppance and our elected officials are asleep at the wheel. The Forbes magazine crapola is just that – crapola. They love Virginia because the state has a low tax rate for corporations which is funded by a relatively high tax rate for individuals.

    Right now, there is a tremendous amount of talent in the DC area and in Northern Virginia. I don’t care whether people like it or not, I don’t care whether people like the way it happened or not. It is what it is. There is also an impending cutback in federal funding coming. Again, I don’t care whether people like it or not and I don’t care whether people like the reasons it will happen or not. It also is what it is. The multi – billion dollar question is whether the educated people in Northern Virginia will stay or go when the federal cutbacks come. I suspect they will go because the state has done far too little to ensure that Northern Virginia gets to keep enough of its own tax money to build an environment where people “put down roots”. The only reason there is some cause to hope the people will stay is the excellent efforts of Bob McDonnell to help right the ship of Virginia. It may be too little too late but it’s at least something. Unfortunately, in order to feed the power mad members of the Imperial Clown Show in Richmond, Gov. McDonnell cannot run for a second term. Which brings us to the upcoming governor’s election …

    I assume your newly found awareness of Virginia’s precarious economic situation and need for economic development impacts your thoughts on the election. I also assume that you recognize Ken Cuccinelli as a paper shuffling lawyer with no entrepreneurial or job creation experience. I also assume you recognize Terry McAuliffe as a man who founded a bank, bought, fixed and sold a construction company and helped start an electric car concern. Putting all of the other legitimate issues aside – TMac would be a hell of a lot more likely to do a good job of economic development than Cooch, no?

    Have you crossed so far over to the good side of the street that you recognize Cuccinelli as being the equivalent of Obama – a radical political opportunist with too little real world experience and too much of a tendency to shoot off on social/political tangents?

    1. reed fawell III Avatar
      reed fawell III

      Excellent view of situation.

      I’d only suggest the following elaboration. Commercial and residential centers that are working so well in close in Arlington and Alexandria are by and large immune from coming downturns, and other disturbances.

      Large swaths of numerous other northern Virginia areas, however, are likely in for substantial decline, absent far more effective private/ public governance. Big question is how fast and how deep the decline. In numerous places its already happening. If past be prologue, that decline can be steep. For example, downtown Arlington fell from a shining city on a hill into a rat-hole in twenty years, largely between late 1950’s to late 1970. Even then the hard recession of the late 70’s very early 80’s set back its recovery substantially, despite, and indeed in part because, of the boom times exploding round the beltway.

      Arlington was fortunate indeed to do as well as it did, just climbing out of the hole, much less finding a way to spectacular success. Today, I see no equivalent growing alignment of stars that might bail out some Northern Virginia ships that are already taking on water.

      Don said: “The only reason there is some cause to hope the people will stay is the excellent efforts of Bob McDonnell to help right the ship of Virginia.” I say Amen to that.

      Regarding last two paragraphs of Don’s post I’m agnostic to skeptical.

  2. EXCELLENT post! too bad Bacon is mired in Cooch-love!

    seriously – “performance” trumps other “best” criteria.

    and for the record, I consider the Milkin Institute NOT a right wing libertarian hack site but instead a substantial institution with real world perspectives and proposals.

    …to wit: ” “to improve the lives and economic conditions of diverse populations in the United States and around the world by helping business and public policy leaders identify and implement innovative ideas for creating broad-based prosperity.”

    and then this:

    The Institute is a 501(c)(3) nonprofit organization and is nonpartisan and non-ideological.

    so CONGRATS for picking …a CREDIBLE organization for once!

    hmm.. BIG Changes between 2011 and 2012.. wonder why?

    also.. what are the things that characterize the best performing areas that are not associated with govt spending?

    what are some of the common threads?

    fascinating report – why not do some follow up posts on some of the parts of it that are really meaty?

    biggest gainers – why?

    biggest losers – why?

    economy – cyclical or structural?

  3. Lots of talent in NoVA and the DC Metro. Agreed, but is it the right talent? Clearly, we have many people who can deal with, and well serve, government agency needs. Can they also develop goods and services that can be profitable in a competitive market? I don’t know. Or should they be looking to develop goods and services that can be used by government to drive out costs? For example, what could be developed to enable state and local government to manage transportation resources more effectively and efficiently? Could products and services be developed that can drive down health care costs? Could goods and services be developed that could help reduce the costs of educating students? Could goods and services be developed that could help the Pentagon and DHS manage resources more efficiently? I’m talking disruptive technology.

  4. “so CONGRATS for picking …a CREDIBLE organization for once!”

    Credible? Really? Mike Milkin the junk bond king? Just another crook who had to figure out a new angle because he got caught.

  5. […] I read an interesting post by James Bacon on economic development in Virginia. It is well worth a read. Then come back here. It reminded me of a subject I’ve been studying for several years now, […]

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