Category Archives: Economic development

Liberty U Acquires Research Park, Advances Research Ambitions

Center for Advanced Engineering and Research in Bedford County. Photo credit: Virginia Hamrick Photography

Expanding its role as the economic dynamo of the Lynchburg metropolitan region, Liberty University has finalized a $4.3 million purchase of the Center for Advanced Engineering and Research (CAER) in Bedford County.

Reports “Work It, Lynchburg“:

For Liberty, the purchase of the CAER facility is an opportunity to build a new research campus on the surrounding 28-acre lot at the New London Business and Technology Center park. The space will serve as the new home for the Liberty School of Engineering and Computational Science.

“This is an exciting step for Liberty University as we expand our presence as a research university and do so at a new location in Bedford County,” Liberty President Jerry Falwell said in a news release from the university. “Our investment in this facility and our commitment to relocate our School of Engineering and Computational Sciences to this site demonstrates our goal to expand our partnerships with business and industry and offer exciting new opportunities for our students.”

Liberty plans to grow its engineering program to 800-plus students and 30-plus faculty and add new undergraduate and graduate degrees along with a new doctorate focused on energy, according to remarks made by Bob Bailey, the executive director of CAER and a member of the LU engineering department advisory board, at a January meeting of the Tobacco Region Revitalization Commission.

Evan Feinman, executive director of the tobacco commission, had described the project as in “financial distress.” An initiative of the Region 2000 economic development group, CAER was originally conceived of as “an industry-focused regional research and development center that drives the development of innovative products and processes by providing local access to university and federal research and inventions.”

Bacon’s bottom line: LU President Jerry Falwell Jr. has set his sights on transforming Liberty University into a religious-oriented, higher-ed powerhouse akin to Notre Dame University or Brigham Young University. From that perspective, acquiring the research center, relocating the school’s engineering and computational sciences program there, and reinforcing ties with regional industries makes total sense. With LU’s resources behind it, the research center could grow into an innovation ecosystem that could spawn new businesses and drive economic growth in the Lynchburg region.

That’s great news for economic development in the Lynchburg region, and it’s a positive sign for the continuing evolution of LU from its origins as a bible college to liberal arts college to online learning pioneer and, now, research university. LU’s business model is highly profitable, and it is investing its non-profit “surplus” into growth.

My main reservation is that Liberty could choose to make its education more affordable by lowering tuition instead — it could perfect a business model of low-cost higher ed that serves as an example to the entire country, thus addressing one of the nation’s major socio-economic crises. Instead, Falwell seems driven to implement a high-prestige, high-cost model of higher ed that is part of the national problem. What a shame. What an opportunity lost. But LU is a private institution, and Falwell is answerable to no one but his own board. Creating a new research university out of fallow fields is a tremendous accomplishment and a not-insignificant consolation prize.

New Energy in Downtown Norfolk

Hilton Norfolk the Main. The Bacon family stayed here during my dad’s funeral. We had other priorities at the time than hitting the rooftop bar. But we may be back!

Hampton Roads may be stuck in the economic doldrums, lagging the state and national economic growth rate over the past decade, but considerable change — positive change — has been taking place under the surface. Spurred by booming residential development, the city of Norfolk’s downtown is looking more vibrant than any time I remember seeing it.

My impression of downtown Norfolk was shaped in the summer in 1973 when I interned with the Virginian-Pilot as a college student. I would venture across Brambleton Ave. to buy lunch at a sandwich shop whose name I can no longer recall — great Italian hoagies, though — and would stroll down Granby Street, fascinated by the gin joints and titty bars catering to sailors and merchant seamen. The words that come to mind are sleazy and dilapidated. Norfolk was still an important regional finance center, so people were willing to work downtown, but no one, other than homeless people, would dream of living there.

Over the succeeding decades, city authorities pumped millions of dollars into urban revitalization projects of varying merit. The Waterside retail development. Hotels and conference centers. Nauticus. MacArthur Mall. The cruise ship terminal. And probably a lot more that I can’t recall offhand. It was an uphill battle as downtown retail collapsed, the local banking industry was absorbed by out-of-state giants, and, other than the location of the Norfolk Southern headquarters, the private sector showed few signs of vitality.

But something happened the past few years while I wasn’t paying close attention. Downtown residential is hot. Drive down Boush Street, and you’ll see wall-to-wall townhouses and apartment buildings for blocks on end. A major bank tower is being converted from commercial to residential. And Hilton’s Norfolk the Main hotel has just opened an amazing new facility. I’m sure there’s a lot more going on that I’m not aware of. But downtown appears to be developing a great restaurant scene, and I expect it is experiencing a revival of small-scale retail and service businesses catering to the growing residential population.

Downtown Norfolk has several assets. It has inherited a grid street system, a wealth of pre-20th century architecture and a mix of office, retail and residential development. It has cultural amenities such as the MacArthur Museum and the Chrysler Museum (just outside of downtown). And it has a fantastic working waterfront.

Before my dad passed a month ago, he and my stepmom lived in a high-rise senior living facility on the waterfront just a few blocks from downtown. From the 12th floor, they enjoyed a panoramic view of the Elizabeth River with its port cranes, shipbuilding docks and all manner of vessels chugging up and down the waterway.  My dad would stand out on the balcony with his telescope and inspect every inch of the landscape. The view isn’t anything you would call beautiful, but it is mesmerizing — there is so much going on. It never gets dull.

I haven’t spent enough time in Norfolk to get a keen sense of what is happening downtown. Who is moving into all these apartments and condos — Millennials or old guys? Are there a lot of start-ups forming? Is an ecosystem of innovation taking root? Is the changing look of downtown an impressive but economically sterile trend, or does it portend a wave of entrepreneurial energy? I can’t say. What I can tell you is that Norfolk is not stagnating. It is changing. It is reinventing itself. And I can’t help but think that’s a good thing.

What Virginia Can Learn from GE’s Relocation to Boston

My apologies if I sound like a broken record, but clearly there are people who still don’t get the message. So, here I go again… Today’s Wall Street Journal interviews GE’s chief financial officer, Jeffrey Bornstein, on how the move of the conglomerate’s headquarters from suburban Connecticut to Boston is working out.

I reproduce select quotes from Bornstein below. As you read them, keep in mind the chart to the left. Richmond ranks 6th among the top ten markets in the country with the highest concentrations of millennials as a percentage of the urban population. Think about where walkable, mixed-use urban development is occurring in the metropolitan region, and where it is not occurring. (Hint, almost all of it is occurring in the city of Richmond and almost none of it in Henrico, Chesterfield or Hanover counties.)

There were moments in the past when we really asked ourselves whether Connecticut made sense for the company. There wasn’t a huge ecosystem around the company. We lived on a very beautiful property in Fairfield, but very isolated. Attracting talent there was a bit of a challenge. For younger folks maybe not the most dynamic place in the world. …

There are upward of 500,000 kids who go to school—undergrad and graduate school, doctorate—every day here in greater Boston. …

There definitely is an innate culture and tactical depth and talent here. It lends itself to these kind of entrepreneurial endeavors. The universities here, whether it’s MIT, Northeastern, Harvard, you name it…the proximity allows us to build even deeper relationships with these institutions. …

If you saw where we were in Fairfield County, it was a morgue. Very little activity. I hated it. Even in our temporary space, the offices are open. There’s a lot more interaction. You aren’t calling people who are four offices away. You can get up and go, and physically grab the folks. We’re translating those experiences to the new facility. It will be very modern, green and open. …

Millennials, this is the kind of environment they want to work in. They don’t want to work in the environment that was paneled walls, and, based on your level in the company, you could count the ceiling tiles and that determined the size of your office. That’s the world of the ’70s, ’80s, maybe the early ’90s. Young talent today want to be in a vibrant, open, interactive, high-tech, fun kind of space. That’s how we thought about design in the new facility. …

From the get-go we knew we wanted to be in a place that was vibrant and entrepreneurial, where you could walk out your door enriched by your environment and your ecosystem. I can walk out my door and visit four startups. In Fairfield, I couldn’t even walk out my door and get a sandwich. We knew we wanted to be in a more urban environment where we could actually participate in the ecosystem and be smarter and more aware as a result.

(Hat tip: Chris Spencer.)

Bacon’s Mushroom Theory of Economic Development

Pennsylvania mushroom farm

Pennsylvania mushroom farm. Photo credit: Wall Street Journal

We’ve all heard the mushroom theory of management — shovel s*** and keep ’em in the dark. Well, brace yourself for Bacon’s mushroom theory of economic development.

Almost half of America’s mushrooms are produced in Chester County, Pa. After peaking in 2014, however, production has declined slightly in recent years. A big problem: a labor shortage. Reports the Wall Street Journal:

Most mushroom growers have failed in efforts to recruit locals for harvesting jobs, which can bring in as much as $50,000 a year but often require workers to start by 5 a.m. and put in six days a week.

“We’d love to get people who live in this area,” said Meghan Klotzbach … regulatory manager for Mother Earth. “They graduate from high school, they just go to Wal-Mart to work. Why can’t you come here and pick mushrooms?”

Chester enjoys no natural advantages in mushroom growing, which takes place indoors, in the dark, using composted soil. The concentration of the industry in this one Pennsylvania County is a historical curiosity, dating back to two Quaker flower growers in 1885 who discovered they could use wasted space under their carnation beds to grow mushrooms. The region maintains its dominance in part due to an elaborate supply chain that funnels large volumes of manure to the farms. But mushrooms can be cultivated anywhere.

Indeed, they are grown in Virginia. A quick Internet search reveals at least three mushroom farms: North Cove Mushrooms in Charlottesville, Sharondale Farm in Cismont (near Charlottesville), and Urban Choice, which is located in the Scott’s Addition area of Richmond.

The Virginia mushroom farms are small enterprises that sell mainly to farmer’s markers and local restaurants. If labor is a constraint in Chester, Pa., why can’t Virginia farmers take up the slack? Wouldn’t $50,000 a year sound like good money to workers in rural Southside and Southwest Virginia (or for inner city workers in Richmond)?

The Washington, Hampton Roads and Richmond metropolitan regions represent a vast market for fresh, locally grown produce of all kinds. Rural Virginia needs more, better-paying jobs. Mushroom cultivation could fit the bill. Find a couple dozen niche agricultural products like mushrooms, and we could see a rural revival in the state.

Just a thought….

Fifteen Nucleii for the Rebirth of Southwest Virginia

Stephen Moret, CEO of the Virginia Economic Development Partnership. Photo credit: Roanoke Times

Southwest Virginia is on track to lose 1,000 residents each year for the next decade, Stephen Moret, chief of the Virginia Economic Development Partnership, told attendees of the Southwest Virginia Economic Forum in Wise, yesterday. The region needs to add 250 new jobs per year over and above the new jobs already coming just to stay stable.

Achieving a 1% annual growth rate will require adding three times the number of new jobs each year, he said, as reported by the Roanoke Times. “Yes, it’s a big challenge. Yes we’re up against a lot nationally, but this is something we can achieve if we’re focused enough, aggressive enough, committed enough.”

Moret proposed a six-point plan to jump-start the region’s economy. As summarized by the Times, he recommends:

  • Expanding computer science programs at higher education institutions.
  • Increasing workforce development training to match business needs.
  • Altering Virginia’s tax structure to reduce taxes on technologically advanced manufacturing businesses.
  • Offering higher incentives to companies willing to relocate or expand in rural Virginia.
  • Spending money to market rural Virginia — something the commonwealth doesn’t currently do.
  • Creating mixed-use developments attractive to young professionals as a way to improve quality of life factors.

You can download a copy of Moret’s presentation from Google Docs. The presentation begins his aspirational goals for Virginia and VEDP, then places Virginia’s rural development challenges in a national context, and ends with a few ideas to advance economic development in the coalfield region (i.e., far Southwest Va.)”

Bacon’s bottom line: These ideas all sound reasonable… but five of the six require more money, either directly through higher expenditures or indirectly through tax breaks. Unfortunately, there’s not a lot of extra cash floating around, either at the state level or the local or regional levels. Perhaps the Tobacco Region Revitalization Commission, which has an annual budget of about $30 million, is in a position to fund the workforce training initiatives, incentives and marketing programs. Perhaps the higher-ed sector can reallocate funds to expand computer science programs. But it won’t be easy finding the resources for new initiatives.

The most original idea — indeed it’s such a departure from the usual thinking about rural economic development that it slaps you like a mackerel across the face — is the recommendation to create mixed-use development attractive to young professionals. This notion has much to commend it, not the least of which it doesn’t require subsidies or tax breaks, and is fully within the power of local governments to implement, subject to market constraints.

I would like to expand upon the idea. By my count there are four cities — Bristol, Radford, Galax and Norton — in Southwest Virginia and more than 40 incorporated towns. The towns range in size from Blacksburg (population 44,200) to Clinchport (population 67) in Scott County — both the largest and the smallest in the Commonwealth. Many of these cities and towns have walkable Main Streets or downtown districts capable of supporting mixed use development.

Blacksburg is a unique case. Its vibrant downtown district is an extension of Virginia Tech, an economic powerhouse unmatched elsewhere in the region, and its success cannot be replicated. But I have frequently referred to the example of Abingdon, which I believe can serve as a template for communities not endowed with a major research university. Abingdon has built an attractive, walkable downtown around the nucleus of the historical Barter Theater, the Martha Washington Inn and a stock of historic brick buildings. The town has become not only a place where people want to visit but where people want to live.

Counties, cities and towns need to fundamentally shift their thinking — as embedded in zoning codes, comprehensive plans, and capital spending plans — from subsidizing rural sprawl to creating walkable urban nucleii. Capital spending plans should invest in expanding the grid street networks from their Main Street/downtown cores. And if they have any cash to spare, municipalities should invest in sidewalks and streetscapes (and, if demand exists, cycling lanes) with the goal of making streets more hospitable to pedestrians. But they need to do it right. Place making is a complex discipline, and investments should be guided by the principles of Smart Growth or New Urbanism. Finally, cities and towns need to get comfortable with the idea that mixing offices, retail and residential is a good thing — it’s what more and more people want.

The big challenge is overcoming stagnant or shrinking populations. It’s hard to justify investing in new buildings in walkable, mixed-use districts if there is little demand. That’s where a regional marketing plan could prove invaluable. But instead of spending marketing dollars on trying to attract light industry (as I presume Moret intends), or even young people, who will be a hard sell without abundant jobs, I would suggest spending it on attracting retirees looking for inexpensive places to spend their leisure years. Such a campaign should not aim at retirees generally but (a) emigres who may have sentimental or family attachments to the region, or (b) retirees seeking to live an active, outdoors lifestyle.

By my hasty, back-of-the-envelope calculation, Southwest Virginia has at least 15 communities of sufficient scale to create small, intimate, walkable places where people with significant disposable income might be willing to live. (My list is hardly definitive, and likely would need to be revised, but the guiding idea is sound.) These are the potential nucleii for rebirth. These are where the tobacco commission should be investing in broadband, where the state and counties should be funneling infrastructure dollars, and where institutional assets such as schools, colleges, museums, libraries, community centers should cluster.

Southwest Virginia needs to reinvent itself for the 21st century economy. Light industry, data centers, solar farms, call centers and back-office operations are all part of the equation. But creating places where people actually want to live is indispensable as well. Kudos to Moret for raising the issue.

Should Historic Neighborhoods Be Allowed to Evolve?

Empty lot in Union Hill where a mixed-use, three-story building is now arising.

Empty lot in Union Hill where a mixed-use, three-story building is now arising.

Union Hill is a run-down neighborhood adjacent to its more famous neighbor, Church Hill, in the City of Richmond. Some of its working-class houses predate the Civil War, but the years have been unkind. For decades, the population was predominantly poor and African-American. Many of the lots are vacant, and many of the houses that remain are dilapidated. There is little commerce — not even retail — and jobs are far and few between.

But the gentrification wave that swept over Church Hill has spilled into Union Hill, and some of the old gentrifiers, drawn by the stock of inexpensive historic architecture, are unhappy with what some of the new gentrifiers are planning. In particular, residents are objecting to a building with four apartments and ground-level retail that is under construction on an empty lot. The building would… horrors!… be three stories tall, and totally out of character with the neighborhood of mostly two-story buildings.

The Richmond Times-Dispatch describes the “thorny issues” associated with revitalization, which, remarkably enough, does not appear to involve the poor, African-American residents who have long lived in the neighborhood. This debate does not pit hip, young urban gentry against the poor, powerless and displaced. Rather, the controversy poses a philosophical question of interest mainly to the affluent: Should a neighborhood be frozen in place architecturally in order to preserve its irreplaceable historic character, or should it be allowed to evolve in ways that provide more amenities to residents? Then throw in a question that goes unaddressed in the article, what right should neighbors have to obstruct a building that demonstrably does them no harm beyond offending their architectural sensibilities?

Developer Matt Jarreau is erecting a modern, three-story edifice on an empty, triangular lot on N. 23rd Street. He’s not tearing down an older structure. Nor is he building a structure that is wildly out of place for the neighborhood — a large, hulking church stands across the street. A rendering depicts a restaurant with outdoor seating, a valuable amenity for a neighborhood with precious little retail presence. But the rendering also pictures a building with flat brick walls, plain windows and minimal adornment that is neither attractive nor in keeping with the architectural character of the neighborhood. Jarreau is planning an even bigger, three-story building with 27 apartments on another vacant lot around the corner.

From the city’s point of view, Jarreau’s real estate investments surely are seen as a bonus. By building on vacant lots, he is creating taxable value. Union Hill is endowed with under-utilized streets, water, sewer and other infrastructure, so the incurs no additional cost. From a fiscal perspective, the two projects represent all gain, no pain. Even better, Jarreau is not displacing anyone — no structures are being torn down, no poor people are being evicted.

“We’re creating a little village. This is exactly how the community operated 100 years ago,” says Jarreau. It would have been cheaper and easier to go with two-story apartments and minimal commercial space. The community needs more services within walkable distances.”

Not everyone is buying that logic. Dixon Kerr, a Union Hill resident for 39 years, says the large buildings diminish neighborhood character because they do not suit the context of one- and two-story, 19th-century buildings, the Times-Dispatch reports.

As seen in other Richmond neighborhoods such as Church Hill and the Fan, historic neighborhoods that are stylistically and visually consistent are viewed in the marketplace as charming. Charm enhances real estate values. Conversely, disrupting neighborhood integrity by erecting buildings that are architecturally jarring or out of scale kills the charm and ruins property values.

Bacon’s bottom line: Both points of view are valid in their own way. I’m torn. I lived in Church Hill for many years and appreciated the historic-district guidelines that prevented people from doing idiosyncratic things like painting houses bright Wahoo orange and blue that would detract from neighbors’ property values. But, then, Church Hill had something worth preserving. Truly, the historic district was, and still is, an architectural gem.

At the risk of sounding like a snob, I have to say that Union Hill is no Church Hill. Some of its buildings may be old, but they are architecturally undistinguished. Moreover, so many have been torn down that restoring the neighborhood to its 19th-century prime is impossible. If people want to preserve the old buildings that remain, that’s fine. But that desire should not discourage others from investing in the neighborhood, creating new housing options, building new amenities and bolstering the city tax base.

The Marketplace is Speaking. Are the Counties Listening?

CoStar is occupying three floors of the Westrock building (on left) in downtown Richmond.

After CoStar Group, a provider of real estate market intelligence, announced last fall its intention to move its research division headquarters to downtown Richmond, the company offered employees from Washington, D.C., Atlanta, San Diego, and Columbia, Md., an opportunity to move to Virginia. A big concern of Senior Vice President Lisa Ruggles was how many would want to make the move. “I had no idea of how many people would be interested,” she said.

She was surprised that 150 applicants responded, Ruggles told Richmond BizSense. After they took part in three-day tours of the metropolitan area, she says, “I told them that they were all welcome to come to Richmond, and the place erupted. Everybody was clapping, people were crying; it was an amazing sight to see.”

AvePoint, a New Jersey provider of Microsoft cloud services, had a similar experience, according to BizSense. “We estimated that when we would be transferring people down here that we might not get a ton of people, because Richmond is very different from New York,” said AvePoint COO Brian Brown. “That’s proved absolutely not to be the case.”

Big selling points: a lower cost of living, shorter commutes and a high overall quality of life. “I think one of the things people are pleasantly finding, especially people who have families, is how cheap it is to find a really nice place to live and how easy the commute is,” Brown said.

Here’s the really interesting thing:

CoStar’s Ruggles said it has been interesting to see where employees have chosen to live in Richmond. Of the 120 employees who made the company’s initial move, she said the majority chose places such as Deco at CNB and other apartment communities in Tobacco Row and Manchester. Only two employees chose to live in Short Pump, said Ruggles, who herself just closed on a house in the West End.

“Coming from D.C., a lot of our employees don’t have cars, and that was not something they were wanting to run out and buy, so a lot of people ended up in locations where they could walk to work,” Ruggles said. “We have found that, because that group relocated from D.C., where they’re used to taking the Metro or walking or riding their bike, they’re continuing to do that here.

Bacon’s bottom line: Richmond’s urban core exerts a strong appeal to highly skilled and educated employees — the affluent, creative-class types who pay more in taxes and spend more in the local economy — from other cities. If the region wants to attract more employees like them, along with the companies that employ them, the city and counties need to facilitate the building of the kind of communities these people want to live in. That means more moderate density, more mixed-use development, more grid streets, more investment in streetscapes, and, where economically justified, more mass transit.

That’s an easy sell for Richmond, most of which was laid out according to the dicta of traditional city planning. It’s a harder sell for Henrico and Chesterfield Counties, built according to the principles of suburban sprawl. The marketplace is yelling loud and clear what it wants. As a Henrico resident with a vested interest in the county’s long-term fiscal viability, I hope county officials are listening. If they’re not the City of Richmond will kick our butts in the economic development game.

Nobody Cares about You, Southwest Virginia, and Maybe That’s a Good Thing

Downtown Abingdon, one of Virginia’s great walkable places.

The Roanoke Times tells a hard truth to the readers of Southwest Virginia: “Nobody cares about you.”

Democratic Governor Terry McAuliffe, says the Sunday editorial, has done nothing to help the counties of the far Southwest whose finances were devastated by the collapse of the coal industry. The Democratic Party in Virginia has “evolved into almost strictly a suburban-urban party that has no natural interest in anything west of the Blue Ridge.”

And the Republicans? After promising to help the coal industry, President Trump has proposed slashing funding for energy research and zeroing out a program that pays to convert old mines into industrial sites. Concludes the editorial:

What’s the takeaway from all this? We’re on our own. We cannot count on either Richmond or Washington to help us. Maybe from time to time one of them will come through with some unexpected grant to help with some piece of infrastructure and we should be grateful. On a day-to-day basis, though, it’s clear that both the state and federal governments have come to a bipartisan consensus: Southwest Virginia doesn’t matter to them.

What is the down-on-its-luck region supposed to do? Businesses need to get more engaged, says the Times. Local government needs to focus more on economic development. Voters need to be more demanding.

The Times is right. Other regions are indifferent to the fate of Southwest Virginia. They have their own problems and their own funding issues. Other regions insist that they’re getting a raw deal from the state. (Talk to a Northern Virginian some time. NoVa may be rich, but its citizens feel short-changed and aggrieved.) And every region pursues its own self interest. The bigger piggies muscle closer to the trough, leaving the weaker piggies behind. It’s Darwinism in a political setting.

Southwest Virginians would be well advised not to pin their hopes on the largess of others. What, then, can they do?

They could start by acknowledging some harsh realities. First, coal is never coming back. Natural gas, wind power and solar power are far cleaner and far cheaper. Economics will dictate than any new electric-generating capacity in the United States over the next decade will be either gas or renewable. Existing coal plants will serve out their economically useful lives, and then they will be phased out.

Second, manufacturing might rebound, but it will never provide the large-scale employment it did a generation ago. Some manufacturing operations may repatriate from overseas back to the U.S., and corporations will continue to invest in plant expansions. But robotics, artificial intelligence and other forms of automation mean that manufacturing processes will create require fewer and fewer jobs as time goes on. The return on investment on traditional economic development strategies — recruiting manufacturing investment — will continue to decline.

Third, the agglomeration economies of the Knowledge Economy will continue to favor metropolitan areas with large, diverse pools of skilled, educated labor over small, semi-skilled labor pools of rural communities. The Roanoke-Blacksburg area, with its access to Virginia Tech, its faculty, graduates and entrepreneurial spin-offs, conceivably can achieve economic escape velocity. But no other city or town in the region has that potential. Meanwhile, young people who succeed in obtaining a college education will continue to emigrate from the region — just like they’re doing in every other rural community across the country.

Making the challenge even more difficult, Southwest Virginia lacks an advantage possessed by other rural areas in Virginia such as the Shenandoah Valley, the northern Piedmont, and the Chesapeake Bay tidewater — proximity to large, affluent metropolitan areas. A location within easy driving distance of big metros will support an economy of resorts, vacation homes, retiree communities and weekend-getaway amenities for city dwellers.

What options does that leave Southwest Virginia? Not many. But the region is not destitute of assets. The Virginia Tobacco Region Revitalization Commission still has millions of dollars to dispense. The region just has to take care not to squander its limited resources on chimera like new Interstate highways, inter-city rail service, manufacturing subsidies, our outright follies such as government-supported golf courses, convention centers and other long-shot efforts to stimulate development.

I’ve written before about the Aspen model of economic development, built on active outdoor recreation — not just skiing but hiking, rafting, rock-climbing, mountain biking, kayaking, fishing, all-terrain riding, and so on — as well as a fabulous, walkable downtown. The walkable downtown is a critical element of Aspen’s success, and there is no reason that Virginia can’t replicate the formula in many of its small towns.

Call it the Abingdon model instead of the Aspen model. The town of Abingdon in Washington County is one of the most charming places in Virginia, and it is set in an area of great natural beauty. It has become destination that people are willing to travel hours to visit. Abingdon is proof that the strategy can work.

Wise County is another innovative community, exploiting its investment in broadband to recruit data centers. Data centers don’t support many jobs, but they do pay taxes that broaden the tax base. The county also is exploring opportunities to supply green energy to the data centers. Regional authorities should map the electric transmission grid, enact solar-friendly zoning ordinances and comprehensive plans, and encourage solar developers to consolidate properties capable of hosting utility-scale solar farms.

America is a big place, and while most rural areas (outside the fracking hotspots) are hurting. But some communities are faring better than others. Some are doing innovative things. Southwest Virginia can learn from the example of others. Perhaps it’s not a bad thing that no one else cares about the region. In the long run, dependence and handouts accomplish less than resilience and self reliance.

Business and Computer Science Majors are the Biggest Bargains in Higher Ed

Graphic credit: “Costs of and Net Return to College Major”

It is widely known that certain college majors offer better career prospects than others. Engineering and business majors earn more money on average than, say, art and English majors. Less well known is the fact that certain majors are more expensive to teach. As seen in the chart above, engineering graduates cost twice as much to educate as library graduates.

The data comes from a new study, “The Costs and Net Returns to College Major,” by Joseph G. Altonji and Seth D. Zimmerman, published by the National Bureau of Economic Research. They drew their cost data from the Florida State University System.

The insight that different majors have different costs has important implications for how state systems of higher education allocate their resources. In Virginia, there has been a big push since the “Top Jobs” legislation of 2011 to increase the number of STEM (science, technology, engineering and math) graduates at Virginia colleges and universities. The shift to higher-cost STEM majors, while arguably justified from an economic perspective, contributes to the rising cost of higher education.

Another way to slice and dice the data is to look on the return on investment for different majors based upon the cost of providing the education and the present value of graduates’ earnings. As seen in the chart below, business majors, who cost relatively little to educate but enjoy high lifetime earnings, represent an extraordinary bargain. By contrast, architects, who are expensive to educate but earn relatively little, are a Return on Investment disaster. Much to my surprise, even engineers don’t look like such a bargain.

Career earnings may not be the best way to measure the social value of a particular major. It is possible that architects contribute far more to social well being than their pay stubs would indicate. (It’s hard to imagine that genders-studies majors have anything worthwhile to contribute to the world, but, hey, that’s me.) But the present value of earnings is a pretty good proxy for a graduate’s economic value.

As lawmakers ponder how to allocate scarce higher-ed dollars, they would be well advised to take into account how much bang for the buck colleges are getting for their investment in different disciplines. Perhaps Virginia colleges need to promote enrollment in business schools and less in architecture. I never imagined myself saying this, but maybe we should be encouraging more kids to enroll in psychology and fewer in engineering!

How National Monopolies Drain Rural Economies

Dilapidated buildings along Main Street in Pamplin City, Prince Edward County. Photo credit: OnlyInYourState.com.

Virginia’s rural communities suffer from huge disadvantages when competing for job-creating corporate investment. Low density makes it expensive to install high-bandwidth Internet service. The small size of rural communities makes it difficult to support the amenities that skilled, educated workers are looking for. And, most important, corporations prefer locating in metropolitan areas with “deep” labor markets where they can tap employees with specialized skills.

Perhaps we can add one more disadvantage to the list: a national economy increasingly dominated by monopolies and cartels. So suggests Lillian Salerno, a former Texan who served as deputy under secretary for rural development in the Obama administration.

“For decades,” she writes in a Washington Post op-ed, rural America has been punished by bad policy that places too much power in the hands of distant financiers and middlemen through the formation of monopolies, which undermines small, local businesses and drains communities of resources.”

New business formation has plunged since the Great Recession, and nowhere more dramatically than in counties with fewer than 100,000 people. Why? Because, Salerno says, the federal government stopped enforcing monopoly laws.

This slow-rolling wave of corporate mergers has left almost all major markets — airlines, telecommunications, health care, retail, milk, seeds for growing crops, hardware, even cowboy boots — dominated by a cluster of mega-corporations, cloaked behind a plethora of brand names. These behemoths now hold unprecedented power over thousands of once-thriving community economies.

Corporate concentration has hit farmers, ranchers and agricultural workers especially hard, she writes. Many markets are monopolized by a single company that dictates the terms of business to suppliers. The seed industry has dwindled from 600 independent companies two decades ago to six today. Similar levels of concentration exist in the pork, chicken and dairy industries.

I don’t know if Salerno is right or not — I would like to see more specifics — but her argument is worth close examination. If her theory holds up, it is discouraging indeed for rural economies, for a decades-long drift toward a cartel-dominated economy is not easily reversed. If it’s any consolation, monopolies are not good for most metropolitan economies either.