Bacon's Rebellion

Democracy Thrives in Sunlight

Here’s What Happens When You Mess Where You Shouldn’t Be a’Messin’

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by

James A. Bacon
in

The City of Martinsville may be on the hook for an $800,000 loan extended to the Integrative Centers for Science and Medicine (ICSM) by the Tobacco Region Revitalization Commission. The tobacco commission gave ICSM the money to help start the College of Henricopolis School of Medicine in the economically beleaguered manufacturing town.

The tobacco commission agreed to back the for-profit medical college on the grounds that it would create jobs and add to the tax base. The city of Martinsville co-signed a performance agreement requiring that the medical college would hire 25% of its staff and generate $1.5 million in capital investment within 18 months. As of January, the 18-month mark, neither goal had been met, reports the Martinsville Bulletin.

Now the tobacco commission wants its money back, and Dr. Noel Boaz, president of the college and ICSM, its nonprofit arm, says the college doesn’t have it. The college spent the $800,000 but never achieved accreditation, and never received permanent certification from the State Council of Higher Education for Virginia. Boaz contends that the tobacco commission is wrong to demand its money back, and the Martinsville Bulletin has all the gory details.

But there is a simple lesson to be learned: Local governments have no business getting involved in business deals like this. Martinsville lacked the in-house expertise to evaluate the plans and promises of entrepreneurs like Boaz, and the city was in no position to take the financial risk. Locally backed economic development deals borne of desperation always seem to turn out badly.

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20 responses to “Here’s What Happens When You Mess Where You Shouldn’t Be a’Messin’”

  1. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    Jim – I suggest that the problem is much larger than Martinsburg, Va. It is ubiquitous, today’s American incompetence. I have been saying this for years. Look anywhere around you – our great incompetence where there was so much competence before – The wasting of $5 Billion trying unsuccessfully to double the size of Dulles Airport – Arlington County’s One million dollar bus stop that did not work properly, even to keep out the rain – the modern debacle of engineering we call the Silver Line, the LOL incompetence of the Nation’s Capital Metro Line – the gross incompetence of the US Congress, its inability to pass a bill to solve any real problem at all – UVA’s inability to restore with integrity the Rotunda for less than 6o million dollars, what should have cost a fraction of that price.

    And I am not alone – Jamie Dimon, Chairman, President, and Chief Executive Officer of JPMorgan Chase, America’s largest Bank, recently said much of the same thing:

    “It’s almost an embarrassment being an American citizen traveling around the world and listening to the stupid s— we have to deal with in this country,” … The U.S. has become “one of the most bureaucratic, confusing, litigious societies on the planet” and “it’s hurting the average American that we don’t have these right policies.”

    What is happening to America now is what happened to Greece and Rome before us – The country has loss its competence, its confidence, its virtue, it pride, its willingness to work and sacrifice beyond the selfish interests of its leaders and much of its people.

    1. djrippert Avatar
      djrippert

      I wouldn’t be so quick to dismiss US competence. I spend a lot of time abroad (I am headed to Spain this evening). The Europeans and almost all of the Asian countries would give their “eye teeth” for America’s technology industry. In the fast growing category of cloud service providers – there are 5 enterprise class cloud service providers – all American companies. Apple is the most successful telecommunications equipment company in history. Boeing builds great airplanes, Tesla builds the world’s most advanced cars. The entire autonomous car industry is based in the US. The only real competition for Intel’s computer chips comes from US based “next generation” chip makers.

      There are plenty of problems, usually when gub’mint sticks its greasy, cash sticky fingers into the matter at hand. The idea that you could build an accredited medical school for $800k or even $8m seems absurd to me. $80m might start to pass the “sniff test” but one would think there would have been a business case that demonstrated how $800k could build a medical school. I’d love to read that business case.

  2. LocalGovGuy Avatar
    LocalGovGuy

    Mr. Bacon,

    You leave out the most amazing thing about this story: Virginia Tech and Carillion just opened a med school in Roanoke. Roanoke is about an hour away from Martinsville. Winston Salem, home of Wake Forest’s med school is a little over an hour from Martinsville. In what universe would ANYONE think this proposed med school in Martinsville is a good idea in light of VPISU and Carillion opening up a brand new med school just up the road and Wake having a well-established med school an hour down the road?

  3. LarrytheG Avatar
    LarrytheG

    This is clearly a “fail” . Neither the Tobacco fund nor Martinsville are doing due diligence. Up our way – the performance incentives are in the form of rebates – if the performance goals are met… not free money up front with no way to recover it if things go bad…

    Incentives configured this way – invite unscrupulous players… and you know that at the front – that if they fail – the govt takes the bath.

    This is not a failure of govt. Govt can and does do incentives “right” and on the private sector side – similar bad deals do happen when greed ignores risk.

    Martinsville by the way is apparently the Opioid capital of Virginia so one might thing there may be fertile ground for some kind of treatment program there… eh? I mean , even the GOP says they want to put money on that issue…

  4. Izzo Avatar
    Izzo

    Yes. $800K would seem to be a drop in the bucket for what it would take to get an accredited school of medicine. Eastern Virginia Medical School and Virginia Tech Carilion School of Medical School got lots of start up funding, had the support of major medical centers, and still had pretty long gestation periods. Imagine pulling that off in Martinsville.

  5. V N Avatar
    V N

    Reed, not only do I agree with you, I’ve actually told green card and Visa holders to go back home and send your kids home.

    Pathetic.

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      Cannot assess the details of your assertion but can say that I believe that:

      A country without enforced borders will not long remain a country worthy of the name.

      A country without enforced laws will not long remain a country worthy of the name, free or otherwise.

      Most laws in America today are not enforced but are instead either ignored or twisted out of shape to serve the political and private ambitions and objectives of a few.

      The American republic, its culture, its ethos, and its constitution, are under grave threat of evaporating.

      And the American Green Card system has over the past several decades has been one of many tools twisted out of shape by those few to promote and insure this process of evaporation. The collapse is coming followed by who knows what.

  6. LarrytheG Avatar
    LarrytheG

    re: everything is going to hell in a handbasket and other “we’re all doomed” thoughts..

    Sometimes it is hard but I tend to try to be a half-glass full type of guy –

    I don’t know why we expect perfection from our institutions.. they’re run by the same type folks as other humans… and I’ve yet to meet a perfect specimen yet! we all screw up.

  7. LocalGovGuy Avatar
    LocalGovGuy

    This story is the bottom line:

    http://www.richmond.com/business/local/amazon-expanding-leasing-space-for-a-packaging-sorting-center-in/article_0a93bf68-742a-5a18-9448-ebfcba81bc17.html

    Hanover and Henrico get 100s of jobs that Southside/SWVA would kill for…and Hanover and Henrico didn’t spend a red cent of gov’t funds to get them. Think about that. I’m sure the Tobacco Commission and Virginia Economic Development officials would have shelled out 100s of thousands of dollars to put those jobs in Southside/SWVA if given the opportunity. Which would have been pure waste.

    As DonR has pointed out, the trend towards greater concentrations of people and wealth in the form of urbanism is 1000s of years old. Trying to fight that trend is foolish. But somehow the General Assembly and some on this blog keep wanting to tilt at that windmill.

  8. LarrytheG Avatar
    LarrytheG

    The problem here is that we’re not talking about geography – we’re talking about people who live in that geography… so we ought to be clear about what we are really advocating.. right?

    We don’t save money when we do that if we continue to pay unemployment, entitlements and money for education, law enforcement, public safety, etc.

    Is that what we are really advocating?

    If not… and we will continue to provide subsidies and entitlements to people in those less economically-prosperous regions .. then it makes sense for the rest of the states taxpayers to try to find ways to employ more people and lessen the entitlement burden… and clearly economic development is a problematical and flawed exercise… with lots of justified criticism.

    but the choice is to reform and improve it to be better ..or to just walk away but in doing that – being honest enough to admit that we’re not just abandoning “geography” but the people living in that geography – also.

    how about it? have I got this wrong.. ??? are we talking about geography only and not people?

    1. LocalGovGuy Avatar
      LocalGovGuy

      I’m talking about both people and geography.

      The geography question is pretty easy.

      You ask about people. Your implication seems to be that by abandoning a geographic area for economic development, that the people in that geographic area are heartlessly abandoned.

      Well….I don’t know you and your situation. But, I’ll put this in 2 contexts:

      First, I was in China for 3 months in 2011. In the past 25 years, well over 50 million Chinese have moved from the countryside to urban areas. It was really interesting to see this up close. Unlike your pessimistic take, the migrants in China were optimistic and wanted to move to where the best jobs were available. There seemed to be a forward looking attitude concerning, “I left behind the stone age and I’m entering the internet age.”

      Second, on another level, your argument seems to hint at a certain class theme. Sort of a, “well, it’s nice for those elites in urban areas to make these points, but they’re really picking on poor, rural people.”

      I’d push back hard against that….first, I’ve lived in many places around the globe. So it’s not like I am able to sit in one place and am telling others to move. Second, I look at my kids and their friends….almost all of them are going to live in at least 5 cities, maybe even 10 before they retire. They’re all driven and they all want to make the best future for themselves and their families. They’re willing to move to go up the ladder.

      So, no, I reject this idea that a bunch of “elites” are setting around and telling others to move. Most of those “elites” move a lot in their lives in order to pursue better opportunities.

      I simply don’t see any reason, either economically or morally, why we should continue to so heavily subsidize these areas of the state.

      Why should people in Southside/SWVA be immune to the market’s call to move for better opportunities? Rural people in China and India aren’t. “Elites” aren’t. They move.

      How many people on this blog have moved in order to get a better job? While I don’t know any of you, I imagine more than half have done so in their lives. Why is it so wrong to ask others in economically depressed areas to move as well?

      1. James A. Bacon Avatar
        James A. Bacon

        You’re right about the “elites” moving around. Not that I consider myself a member of the elite, but I do have a couple of Masters degrees. Having grown up mostly in Washington, D.C., I moved to Martinsville for my first job — quite a culture shock — then to Blacksburg, Roanoke, and Charlottesville before settling in Richmond. I really liked living in Roanoke — it was a wonderful town. But it didn’t offer the opportunity to advance that I wanted, so I moved.

        So, I agree with you and others (Don Rippert has made the same point) that people need to move to where the opportunities are.

        One force that inhibits that migration is the high cost of real estate. The most prosperous metropolitan regions with the most job opportunities also tend to have the most expensive real estate — so expensive that it’s constitutes as real barrier to anyone who would move there. Of course, that barrier isn’t insurmountable. I remember my daughter moving to Jackson Hole after graduating from college. The real estate there was super expensive. She and three roommates shared an apartment — and they let friends crash on the sofa for weeks at a time. If there’s a will, there’s a way.

        1. LocalGovGuy Avatar
          LocalGovGuy

          You and your daughter are exactly who I am talking about…people do tend to find a way if they really want to find a way to move.

          I had a daughter who also couchsurfed for a while in Austin. She and 3 rooommates were all in the start-up scene and shared a tiny apartment. But they were all making sacrifices and moving to a place with opportunity.

          I agree that more needs to be done to lower housing costs.

          But I reject the notion that the state should continue to heavily subsidize certain regions simply b/c people are unwilling to move. I still believe that the best thing the state could do for SWVA is to invest heavily in Roanoke’s economic development. Sure, it may be a “move” for some people, but it’s within 3/4 hours for a lot of people in that region of the state. Is it too much to ask that people move 3 or 4 hours away to better economic opportunities? If you want to really help that part of the state, invest in Roanoke.

          1. djrippert Avatar
            djrippert

            Agree completely with your thought on Roanoke. That’s the only viable idea I have heard over the many years I have been reading people’s theories on ow to help SW Virginia.

    2. djrippert Avatar
      djrippert

      We should stop providing anything more than “bare bones” entitlements to areas of Virginia with dim economic prospects. Use the tobacco funds to help people relocate rather than building pie-in-the-sky medical schools. The rural areas of Virginia have been depopulating for a century. The automation of farming, movement of textile manufacturing offshore, depletion of the coal seams, etc just make economic development very hard. Then you look at a city like Seattle and it’s growing like a weed. Tell me where, in America, the rural renaissance is working.

      If you want to make Roanoke the next Louisville – I’d buy that. However, Louisville annexed a huge amount of land to get to a viable size and practical planning capability so the city and surrounding “suburbs” could be built out in the kind of intelligent way that Jim Bacon often describes. Interestingly, the Commonwealth of Kentucky can force its politicians to think “out of the box” to make progress in Louisville. Do you really think that The Imperial Clown Show in Richmond could pull off something like this ….

      https://web.archive.org/web/20140630163310/https://www.louisvilleky.gov/NR/rdonlyres/177354E3-E933-432E-A880-4CE6FDFCFD42/0/MergerSummary.pdf

      I don’t.

      Until we have an elected government that can “pull off” in Roanoke what Kentucky pulled off in Louisville we’ll continue to fail in rural Virginia. Even if we ever have such political leadership the answer will be for people from less densely populated places to move to more densely populated places. Maybe Roanoke?

  9. LarrytheG Avatar
    LarrytheG

    no elites.. here.. nor resentment towards them , but I think you evaded the people question.. the people who can’t leave… are not young, don’t have the education and skills to compete for wages sufficient to pay living expenses in urban areas. What do you do with these folks when their only real wealth is the land they own and live on?

    If they move .. and they still need entitlements to survive , what have you accomplished?

    It’s not my situation by the way – I’m a Marine corp brat and was more than willing to go where the jobs were, did not go straight to college.. had to work while I went, etc..

    and no I’m not the whining snowflake who wants to “help” those “poor” folks who have no choice but to suck on those entitlements either.

    Actually pretty hard-nosed about it… but at the end of the day – this is not a simple problem with simplistic sound-bite type solutions.

    we’re talking about real human beings… struggling in a world – that has left them behind economically… many of these folks actually voted for the guy who claimed the “elites” did not understand or care about those rural folks whose economies are wiped out.. in fact THAT guy is promising to bring their jobs back – and they… believe him…

    You have to explore whatever viable economic activities might be feasible in those rural areas… get the young a good education and encourage them to move to urban jobs… but you still got the others.. and some lower level economy to sustain their region is not out of the question in my mind… and if it generates economic benefit that reduces the entitlement burden , why not?

    simplistic answers are in vogue these days I realize… but the real world suffers no fools… it demands more intelligent responses… than “screw them”.

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      Excellent comment, Larry. This is not a zero sum game. And I would differ only as to the “Elites.” Notice those fixated on elites think they are elites. Rather the large majority are typically fools staring on their own navels, thinking they have Godlike qualities. Cities are swamps too. Insufferable pride too goes before the fall. The bigger the temple, the louder it collapses. And the country abides without care or concern.

      Jim – your daughters Jackson Hole story resonates loud and clear. Give her my best, the same thing was going down 45 years ago in Jackson Hole, filled with UVa grads. What exiting dynamic people they were and still are.

      1. James A. Bacon Avatar
        James A. Bacon

        My daughter is a Wahoo, and she was induced to move to Wyoming by other UVa grads. From what you say, the UVa-Jackson Hole connection has existed for a long, long time.

      2. Reed Fawell 3rd Avatar
        Reed Fawell 3rd

        Wahoo Paradise since that late sixties at least. Wilson, Jackson, Moose, and all points north, south, east, and west – pure Wahoo County. But don’t miss Sunday Church (6 to 10 pm) across from Nora’s in Wilson at the Stagecoach.

  10. LarrytheG Avatar
    LarrytheG

    I keep encouraging folks to get off the interstates – for a little while every now and then when you get beyond the urban areas and their exurban commuting satellites and pay attention to the houses… because they tell you something about the rest of America not unlike RovA (the rest of Virginia) and the folks who live there and their living standard/economic status.

    Those houses in RoA are not 300-600K 3000-4000 square feet with granite islands in the kitchen… they’re formica …and they’ve been there since the house was built in post-war…. and the taxes on them while quite minimal compared to urban/suburban… are about all they can afford.. given whatever modest ways they can manage to make a living.

    Many look like this:

    http://2.bp.blogspot.com/-DjeyAYWsYXU/TsEuvWEfk1I/AAAAAAAAGrI/Gsj9k4kM698/s600/house.jpeg

    So you’re talking about telling these folks to move to the “city” and get a job.

    Many would be lucky to get 50-100K for that home.. who wants it? Many sit vacant after the occupants are gone.

    So they move to the city with their 50-100K… what kind of housing could they buy? Tell them to get an apartment? To find a job as a janitor or in a nursing home … etc…

    That’s the recommended solution for the folks living in economically depressed rural areas? Wouldn’t that be like jumping from the frying pan into the fire?

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