Economic Development and Broadband Connectivity

In February, Bacon’s Rebellion published a column, “Reforming Regional Government,” by Reid Greenmun, a regular contributor to the comments section of the blog. I did not give his column the build-up it deserved. But I won’t make the same mistake with our second contribution from a regular reader.

The blogger who goes by the name of Groveton has penned a piece, “The Commonwealth is Flat,” which explores two interconnected ideas: (1) that the potential exists to “outsource” jobs from growth-choked Northern Virginia to downstate communities, and (2) that a prerequisite to the first goal is lacing the Commonwealth with better broadband connections. Groveton is the chief technology officer of a major Northern Virginia technology services firm, so he knows of what he speaks.

The first idea is not entirely novel. A string of Virginia governors has endeavored to interest Northern Virginia’s dynamic tech community in investing downstate, particularly in depressed regions like Southside and Southwest Virginia. Delegations of Northern Virginia luminaries have made the trek to Blacksburg, Abingdon and Danville to see for themselves that downstate is not a total technology wasteland. The Virginia Business Pipeline periodically hosts gatherings to introduce NoVa-ites and Downstaters in similar business fields. Outside of the outsourced state IT facility in Lebanon, however, the yield has been disappointingly small.

In what may be the most telling passage of the piece, Groveton suggests that downstate economic developers may not be trying hard enough.

Someone has to organize the people who want to be employed (at a distance) and then sell their services to potential employers. That’s just not happening in Virginia.

I have worked in one or another of those nameless, faceless office buildings in D.C. or Northern Virginia for the last 26 years. Since 2000 or so I have been deluged by people asking me why I don’t outsource some of our work to them. These salesmen come from India, China, Texas, Israel, Oregon, the Czech Republic, the Slovak Republic, Russia, Belarus, Vietnam, Canada and countless other countries and U.S. states. They talk about the energy and the skill of their citizens, their lower wages (and therefore prices), their fluency in English, the stability of their currency relative to the dollar and they talk about their networks, always the networks. They tell me that they will create our PowerPoints, do our secretarial work, test the systems we write, develop the systems we design, read our X-Rays if we’re sick and answer our phones when we’re away.

Through all those years and through all those meetings I have never been approached by a single person from any Virginia jurisdiction with any outsourcing offer. Not one person.

Regarding the second key point Groveton raises, Virginians are kidding themselves if they think they have a world-class telecommunications infrastructure. According to the Speed Matters website, Virginia has only the 11th best broadband connections among the 50 states and D.C. According to the Organization for Economic Cooperation and Development, the United States ranked only 15th among the countries of the world for broadband connectivity. Even more discouraging, the U.S. is falling further behind: The OECD ranked the U.S. 21st in the rate it was increasing connectivity.

Gov. Timothy M. Kaine’s newly appointed “Broadband Roundtable,” to be chaired by former Gov. Mark R. Warner, is a positive step, writes Groveton, but way overdue.

Image credit: Speed Matters, page 52 in the PDF file. Green shows areas where median download speeds exceed 6 megabits per second. Yellow is between 768 kilobits to 6 megabits, and red is less than 768 kilobits. The median download speed in Japan is 61 megabits per second!)


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34 responses to “Economic Development and Broadband Connectivity”

  1. FreedomAdvocate Avatar
    FreedomAdvocate

    Watch Teletubby and Moses get arrested at the Capitol while angry bystanders demand the release of the purple teletubby, the “moral fiber of America.” See activists hit the streets demonstrating against Ted Kennedy’s Thought Control Bill to give homosexuals special privileges. Go to http://publicadvocateusa.org/ or http://www.youtube.com/watch?v=YUBj51aLV1A

    This shows Public Advocate demonstrating in Washington, DC, protesting the Local Law Enforcement Hate Crimes Protection Act (H.R. 1592), which would grant special rights to homosexuals. This law would add sexual orientation to federal hate crimes statutes.

  2. Larry Gross Avatar
    Larry Gross

    Excellent article from Groveton.

    I’d be curious to know if the private sector was/is responsible for Japan’s 6 megabit speed (as well as the other countries) or was it a government inititiative?

    I ask this – because as far as I know, Virginia would not stand in the way of the private sector wishing to wire all of Virginia with high-speed fiber.. right?

    so why are we not wired and Japan is?

    Wouldn’t you think that if Va had a mother-lode of highly-trained workers readily available for work that private industry would beat a path to their proverbial doors dragging high-speed wires with them?

    Why does NoVa prefer to outsource 10,000 miles away rather than 200 miles away?

    It’s hard for me to accept that the reason why is that folks from Colburn, Va won’t make a journey to NoVa.

    Heckfire.. if nothing else.. those cities could band together and hire a firm to market them….

    Of course.. perhaps.. as long as they know that NoVa taxpayers will pick up local costs .. why bother with trying to get work for the locals… (flamebait warning!).

  3. Perhaps it’s time for Virginians to take broadband connectivity into their own hands, especially those residing and/or living in rural areas.

    I think it’s admirable that the state is cluing in on the vast pockets of limited, if any, broadband capabilities across the state. However, citizens do have the power to deploy their own initiatives.

    http://www.vawifico.org/ is a proposed state-wide wireless freenet initiative consisting of regional freenets such as the proposed Richmond network at http://www.richmondfreewifi.org.

    Perhaps it’s time to get crackin’.

    Regards,
    Kory

  4. Larry Gross Avatar
    Larry Gross

    I’m not opposed to ANY means of rural Va becoming better “wired” including private freenets but the question remains – why is Japan and most of the rest of the industrialized countries way ahead of us on this?

    Did they “out-freenet” us?

    I doubt it but if they did – all things being equal – we must be a bunch of sluggards… as compared to them…

    We do have some leaders who feel that the internet is no less important than electricity – and recall the days when it was nothing short of a national priority to get our rural areas – electrically “wired”?

    Actually the “wired” aspect is duck soup compared to the second issue -which is an education that gives rural Virginians a competitive opportunity for world jobs.

    we could completely wire Va to be competitive with Japan but if our workforce is not competitive on an education level then we won’t get the jobs anyhow.

    Is this a job for Coburn, Va or private freenet folks?

  5. Reid Greenmun Avatar
    Reid Greenmun

    Thanks for the plug Mr. Bacon – on my white paper for better regional government decision-making.

    On the issue of government being involved in providing free bandwidth to the public.

    Um, can someone please show me where that is a function of government?

    My city tax funds are being diverted from required government services to pay for “free” internet connectivity in our so-called “Town Center”.

    My family still lives on a small dairy farm in Harpursville New York. They live on a dirt road that runs down to the paved county road. The paved county road is named “Farm-To-Market Road”.

    Our family farm does not yet have cable TV. The private cable company made a business decision and will not pay to run cable up the dirt road unless we have a certain number of subscribers.

    To have the option for more TV channels we have to buy a dish and subscribe to satellite television.

    The choice is ours.

    In this example it is not a requirement for other taxpayers to subsidize my family’s desire for more television access.

    If it makes a profit for the private sector to “wire” rural areas with a low number of customers, then they will do it.

    Otherwise the user needs to pay for the cost of the infrastructure required for the services they want, but they do not have because of their choice to live in “rural” America.

    The United States is a free nation – but it should not be a Socialist nation that subsidizes the wants of those that chose to live where things like cable TV and “free” wireless access exist.

  6. Jim Bacon Avatar
    Jim Bacon

    It seems in this case that Reid is a proponent of people paying their location-variable costs. Hooray!

    I don’t profess any keen understanding of this topic. But I do believe that the federal regulation (or botched deregulation) of the telecommunications industry may have something to do with the slow pace of upgrading the nation’s telecommunications infrastructure. My standard rule: If the market isn’t working like it should, check to see if some government law or regulation is screwing it up.

    Otherwise, it may be a matter of simple economics: It’s really expensive to string fiber optic cable out to farms and low-density subdivisions. If someone chooses to live in one of those locations, they can’t expect the rest of society to bail them out if they decide the location lacks something (broadband) that they want. One of the reasons they probably chose to live there in the first place was that lots and houses were cheaper than in the city. The reason that lots and houses were cheaper is that it is harder to serve with utilities and public services. They can’t expect the cheap lots and cheap utilities and services.

    That said, I can’t blame the businesses and citizens of smaller communities for banding together and using their buying power to persuade telecom companies to invest in their communities. Broadband is an essential service.

  7. Groveton Avatar
    Groveton

    Great comments. Thanks to all for taking the time to read my article. Also thanks to Jim Bacon for the invitation to write and the editing which turned my illiterate ramblings into a well organized article.

    Before I try to answer some of the questions posted, let me offer a caveat – when it comes to telecommunications policy everybody has an agenda. The telcos, the unions, the technology companies, the equipment manufacturers, national, state and local politicians – everybody. This is a huge industry with huge amounts of money at stake. For example, Verizon has annual revenues of $88B and 217,000 employees. I see the Clinton and Bush administrations in general and Congress in particular as the root causes of our current troubles.

    Why does Japan have such good broadband penetration. A couple of reasons:

    1. Demographics and population distribution –

    Japan is both densly popullated and the population has a tight distribution. Japan (population of 128M) is the 30th most densely populated country in the world. The United State is the 172nd most densly populated country.

    http://en.wikipedia.org/wiki/List_of_countries_by_population_density

    In addition, the population of Japan is less evenly distributed than the US –

    “About 70% to 80% of the country is forested, mountainous,[38][39] and unsuitable for agricultural, industrial, or residential use. This is due to the generally steep elevations, climate and risk of landslides caused by earthquakes, soft ground and heavy rain. This has resulted in an extremely high population density in the habitable zones that are mainly located in coastal areas. Japan is the thirtieth most densely populated country in the world.[40]”.

    The net effect is a lot of people living in very high density areas which can be economically reached by broadband.

    Some argue that population density is a bogus argument citing Iceland as a country with a lower population density but higher broadband penetration (Finland too). However, this criticism ignores the population distribution point. Iceland has about 330,000 people, 117,000 of who live in the CIty of Reykjavik. In the US, this would be the equivalent of 116M people living in a single city.

    2. US Regulatory blunders exacerbate bad corproate behavior. The Telecom Deregulation Act of 1996 seems to be an epic failure of legislation. The Act was so poorly written that enforcements of the law (made by the FCC) routinely failed in court. Some of the better written sections of the Act went into law while other sections were mired in legal battles that only new law could solve. The incumbents won more than the challengers and the Telecommunications Deregulation Act of 1996 should have been called the Telecommunications Consolidation Act of 1996.

    Meanwhile, the “internet bubble” happened. People rememner this as a time when small dot com companies with little revenue and negative profits became investor darlings and commanded huge market capitalizations. What most people forget is that the related telecom bubble resulted in a near collapse of the very mature US telecommunications industry. Prices for telecommunications stocks were bid up to astronomical levels. New network capacity was built at unsustainable levels. And then the bottom dropped out. Some telco executives committed fraud on a grand scale, a number of them went to jail. Some telco executives got caught up in the hype and just mismanaged their businesses. Many of these telcos went bankrupt or were bought at “fire sale” prices. Wall Street played the role of helpful neighborhood crack dealer and made everything that was going wrong go that much worse.

    When the dust settled, the Federal government apparently decided that the few remaining financially viable telcos could do more or less as they pleased. And what they pleased was to consolidate the industry on a grand scale. So, the US managed to create the worst of both worlds – an industry deregulated by act of Congress without the widepread competition that the deregulation was meant to create. In most locations, this equates to a duopoly situation where a large cable company with a monopoly inside the jurisdiation competes with a huge telco conglomerate with an effective telephone monopoly over broad portions of the whloe country. Not exactly what most people would think of when they think of open competition in a deregulated market.

    In addition, the acquisition binges left some of the survivors with ruptured balance sheets. And … the investors had no appetite for more “boil the ocean” spending sprees.

    For a great description of this meltdown, check out Telebomb by John Handley. Mr. Handley provides a compelling narrative about how the US telecommunications industry went from the world leader to mega mess in 10 short years.

    Net, net – the government lacks the power to compel broadband network buildout and the competitive situation is too consolidated to provide a need for rapid broadband deployment either.

    For a good, short article on how Korea became (arguably) the world’s broadband leader, see:

    http://www.businessweek.com/globalbiz/content/jun2007/gb20070621_370511.htm?campaign_id=rss_as

  8. Groveton Avatar
    Groveton

    Reid:

    I believe your family in rural New York has been getting subsidized voice telephone service since Telecommunications Act of 1934.

    http://en.wikipedia.org/wiki/Universal_service

    In fact, they are probably receiving subsidized wireless service now.

    https://www.baconsrebellion.com/Issues07/07-16/Rooney.php

    The only real question is whether broadband qualifies as a type of service that should be subsidized in rural areas like wireline voice and wireless have been subsidized for years and years.

    Your family can send their thank you notes to:

    Groveton
    Unwilling Subsidizer of Various Rural Causes – in Virginia and Elsewhere
    PO Box 666
    McLean, VA 22102

    If you are uncomfortable sending the thank you notes to me, please feel free to have them sent to any other resident of Fairfax County, VA.

    (:

  9. Reid Greenmun Avatar
    Reid Greenmun

    Groveton, my family has lived on that farm for almost 200 years.

    In my dining room here in Virginia Beach hangs the wooden Thomas Edison phone that my family first purchased.

    In order to have a telephone line run off of the county road, back in the 1920s they had to pay for the telephone polls, wires, and lines to be installed up to the farm, from the lines installed down on the county road.

    The folks living along the paved country road did not have to pay for their polles or lines. In effect, we subsidized them.

    We constructed the road up to the family farm, and up until the early 1970s, we plowed the road in the winter. During the 1970s the town began to drive the school bus up the road to pick up the young children. Prior to that I had to walk (or drive) down the long dirt road to the county road to wait for the bus. BTW it is really cold in upstate New York in the dead of winter.

    We paid the same taxes as the folks in town that had their roads plowed and that did not pay for the telephone lines to be connected to their homes.

    The farm uses wind power for electricity – it has since the early 1970s. It generates more electricity than it uses, so its excess power is sold back to the power company “grid”. Back when I libed there is was Niagra Mohawk. I believe my family still gets a small check back from the power company every 4 months, but I’m not sure. I have not lived there since 1977.

    The farm has its own land fill, yet we had to paid to subsidize the county land fill. The farm never did receive weekly garbage service. Yet the taxes we paid were not reduced because of the town services we were not provided.

    The farm grows the wood we burn in the winter to keep warm. All summer we work to gather the wood we will need each winter. We grow the hay, oats, corn, and other things required to feed the dairy cows and horses. We sell the excess hay we grow to other farmers. I believe they lease some fileds to other farmer now, to help pay the taxes. The dairy farm stopped producing milk some years back. The milk distributors refused to drive their trucks out to pick up the milk each day and required expensive HUGE bulk tanks that we would have had to buy, so they could be kept cold in bulk, and only drive out to pick up the milk once a week. The cost was too expensive for the small volume milk producing family farm to continue.

    My family did not move to Harpursville to avoid living in an urban area, they came to America to find a place to own their own farm and earn a respectable living.

    They never really had “money”, yet when the residential housing began to extend out from Binghamton to Harpursville, they land values began to rise and the taxes did too.

    That is why eventually the economics of the family farm proved the need to stop farming, to lease the land to larger farms, and to begin to sell of land to developers to survive.

    I don’t know if the farm has wireless access, but I doubt it.

    I think the only reason cell phones work there is they farm is high up on a moutain.

  10. Groveton Avatar
    Groveton

    Reid:

    Great comments on the farm. And it is definitely very cold in upstate New York in the dead of winter – very, very cold.

    Sounds like your family were what would be called early adopters. They had rural phone service even before the 1934 Act. Interesting. That makes for some interesting questions about who gets subsidies and who gives them.

    Also interesting (and sad) about the economics of family farming.

    However, I wonder about something – if the costs of fues continue to rise, will thw economics of family farming shift?

    I have been told taht growing a bushel of corn takes 1/2 gallon of gas while packaging the corn and transporting it ti market takes 2 gallons of gas. If gas got substantially more expensive would locally grown foods have a significant advantage (based on the lower costs of transport)? If so, farms outside Binhamton would become economically advantaged for the Binghamtom market. Of sourse, consolidating small farms into larger farms might still be the trend around Binghamton but – even with that – I wonder how much of the consolidation hinges on buying and using bigger fuel buring machines to make the consolidation make economic sense.

    The only play for broadband in this situation is in facilitating the market for locally grown food. One of teh advantages of mega farming is that companies like Sysco (the food company, not the router company) assure the supply of food from mega farms to the buyers of that food. If fuel prices (or a concern for maintaining local farms) resulted in more produce in the stores and restaurants of Binhamton being grown around Binghamton, there would have to be a way to connect the stores and restaurants to the local farms. While farmers’ markets work they are sporadic and the buyer has to go to the market just to see what is being sold. I wonder of there is a place for a marketplace for locally grown food bought and sold over the internet. Kind of an eBay for local food. It would replace expensive and carbon producing food transport costs with local trips and software. It might also give the local farms a new economic lease on life.

    Any thoughts on this (admittedly half baked) idea?

  11. Jim Bacon Avatar
    Jim Bacon

    Groveton, There is nothing half-baked about the idea at all. Waldo Jaquith has written on his blog about a Charlottesville initiative to promote locally grown foods. And Ed Risse has written in Bacon’s Rebellion about using food safety as a competitive advantage for locally grown foods. Locally grown foods have a promising future if someone can put all the pieces together.

  12. Jim Bacon Avatar
    Jim Bacon

    P.S. Promoting locally grown foods is one of the objectives of the Journey Through Hallowed Ground organization in Virginia’s northern piedmont. It may take a group like JTHG to pull it off.

  13. Larry Gross Avatar
    Larry Gross

    I’m choking on baloney – folks

    besides phone lines…

    * farm to market roads
    * rural electrification
    * motorized machinery, tractors, combines, etc (built far, far away from the farms) and – using FUEL … REFINED far, far away from the farm

    does anyone believe that PRODUCTIVE farms operate as self-sufficient, stand-alone enterprises that never needed nor used Fed gov (taxpayer support) for phone, electric, roads, fuel, etc?

    I think it’s a hard, hard sell to say that on one hand .. folks who choose to live in the country should pay for their locational costs – when in all likelihood.. the very electric lines that go by their newish homes.. were put there for farms originally…

    how do we reconcile the locational costs for homes as compared to farms?

    and .. despite some claims to the contrary – the internet, GPS farming, and other modern technologies are key to modern, productive farming…

    The difference between countries whose farms not only feed their population but export food and countries that cannot even feed their own populations…

    are technologies… employed at the farm level.

    methinks it foolish.. to continue to talk about farming going back to the “good ole days”…

    Let’s please distrinquish between FARMING … and farming… (lower case).

  14. Ray Hyde Avatar
    Ray Hyde

    It just isn’t all that simple, but overall, my experiences are similar to Reid, been here for hundreds of years, used to be profitable, now we are told what we can and can’t do by a bunchof newcomers who want tosave farming (lower case).

    However, I’m extremely gratified to see the recent movement towards buying locally grown products. That said, if you relied only on locally grown produce, your winter diet in upstate New York (and most other places) would be very limited.

    If Virginia farms add thousands of acres of corn they still won’t necessarily be able to compete with places that grow 250 or more bushels on dead flat land they can work 40 rows at a time. But, it may help out my hay operation by lowering competition.

    The differnce between FARMING and farming is that we only need a little of the former to meet all our needs, but the latter meeets a lot of other needs, many of which have no recognized market, yet.

    PRODUCTIVE farms have never operated as self-sufficient, stand-alone enterprises that never needed nor used Fed gov (taxpayer support) for phone, electric, roads, fuel, etc., any more than PRODUCTIVE residential family homes have. We are all interdependent and we need to learn to be fair about what those dependencies are.

    There is, or easily could be, enough food to feed the entire world adequately. It isn’t a farm problem: it is one of distribution, control, and marketing.

    No, we are not going back to the good ole days (thank God), but that does not mean there is not a new day ahead for farms. Maybe they will be solar or wind farms, but even if not they will employ a lot of new technology. Today farms use GPS along with harvest monitors to pinpoint production losses so that fertilizer can be applied only where it will do the most good.

    I get calls from as far away as Florida to deliver hay, based on a one line internet ad.

    In the 1930’s a pickup truck was equivalnt to the price of 30 hogs, to dayit is more like 500 or a thousand hogs. Then again, the pickups are a lot nicer.

    Farming (upper or lower) depends on land prices, in the end. At $4000 an acre, only the best farmers can make it. At $7000 an acre you are better off selling the land and buying 5% government bonds. (SC Dept. of Agriculture.)

    If we put the entire US population in 4 member family, quarter acre lots, we wouldn’t even use up two thirds of Texas. We are a long way from running out of open space, or even prime farmland, but that is no reason to be stupid about how we use it.

    As for fuel, I can easily burn as more in a weekend on the farm than I do commuting to work for the week. I tell my customers quite frankly that I am in the business of converting diesel fuel into horse fuel.

    Sure, location is important, we manufacture our farm equipment in India, Japan, Korea, and Belarus. We grow cows in Virgina and ship them out west for finishing and slaughter, then ship the meat back. So what? When fuel prices cause a change, change will happen.

    I think it’s a hard, hard sell to say that on one hand .. folks who choose to live in the country should pay for their locational costs – when in all likelihood, and by all evidence, those who live in the city have far higher locational costs.

  15. Reid Greenmun Avatar
    Reid Greenmun

    IRT: “Let’s please distrinquish between FARMING … and farming… (lower case).

    Well, that’s a good point. My family was farming (fairy farmers) with a small “f”. Now their land is being farmed by mega Farming Comapnies – with a large “f”, and they pay rent (lease) for the land – the lease funds help pay the taxes so the family can retain as much of the farm property as they can afford – to pass onto us kids.

    Of course, I bailed out of harpursville becuuase I realized that farming (with a small “f” was not a path to a decent life style, it involved a great deal of hard work, and the equipment, even when purchased used at auction, required endless indebtedness to local banks.

    Then the local banks merged or were bought up and are now mega-banks, with people we never met owning our farm’s “paper”.

    So, when the decision was made to throw in the towel on the self-sustaining dairy farm, the farm equipment was sold at auction – and the bank notes were paid off.

    I like the concept of a lower cost to transport farm products to local markets as a form of competitive advantage, but I think that the real competitive advantage comes from the larger Farms (capital “F” having access to lower cost capital to purchase their expensive Farming equipment.

    Like someone wrote, the larger and more modern Farming equipment is the real cost saving strategy on the production side.

    That, and a willingness to hire illegal labor and pay them low wages “under the table”.

    My Great Aunt Nelly and Great Uncle Joe would never do that. They were not raised that way.

    They were quiet patriots that love our nation and love the opportunity to own their own business, worship their God in peace, and raise generations of kids that they instilled strong values into – and who went on to take care of themselves.

  16. Reid Greenmun Avatar
    Reid Greenmun

    Dairy farming – not fairing farming – Doh!!!

    (I need proof readers)

  17. Jim Bacon Avatar
    Jim Bacon

    Reid, I was thinking, wow, that’s an interesting niche. Fairy farming… I wonder if that’s anything like leprechaun farming.

  18. Anonymous Avatar
    Anonymous

    Would someone please put the Eastern Shore back on the map of Virginia? Those of us in Northampton County (and, I’m sure, Accomack) would appreciate it. Small point. Loved the article.

  19. Jim Bacon Avatar
    Jim Bacon

    Anonymous, the reason that the Eastern Shore does not appear on the map, I’m guessing, is that there wasn’t sufficient data for Speedmatters.org to color code the bandwidth in your region. If you look real hard, you can see the Eastern Shore on the right-hand edge of the map!

  20. Reid Greenmun Avatar
    Reid Greenmun

    IRT: Fairy farming (with a small “f”)

    Jim, well, my sister Chris, is a Wiccan “White Witch” so it would not surprise me to know that she was Fairy farming on her 5 acres of the family farm Mom left to her.

  21. Groveton Avatar
    Groveton

    “I think it’s a hard, hard sell to say that on one hand .. folks who choose to live in the country should pay for their locational costs – when in all likelihood, and by all evidence, those who live in the city have far higher locational costs.”.

    Is this true?

    I have never been a farmer. So, forgive me if I am saying something stupid here but … in rural areas aren’t there a lot of subsidies – such as:

    1. Electricity
    2. Wire line phone service
    3. Wireless phone service
    4. The farms themselves (by the Dept of Agriculture)
    5. Education (by the SOL transfer scheme)
    6. Federal income taxes (by not recognizing cost of living differences in the US in the tax brackets).
    7. Etc.

    I have nothing against Farming, farming, farmers or Wiccan “White Witches”.

    I just wonder whether the government spends more per capita on people living in rural areas, suburban areas or cities.

    And I wonder what the government “net” is by area. In other words, if I subtract total taxes paid (in all forms) from total government spending (in all forms, including a per capita allocation for things like the Navy) – is it a positive or negative number for people living in rural areas, suburban areas or cities.

    I am perfectly happy to pay my “fair share” of taxes. However, I am unwilling to subsidize other people’s lifestyles forever.

    If people living on farms/ in the suburbs / in cities aren’t paying enough in taxes to cover their total costs (not just location specific costs) then they should pay more in tax. If, as a community, people can’t make enough money to pay the taxes to cover their total government costs then they should do something different for a living (and make more) or move.

    If this calculation shows that I am not paying enough in taxes – then I’ll pay more.

    Will you say the same?

  22. Reid Greenmun Avatar
    Reid Greenmun

    Groveton,

    Maybe that is why the concept of the FAIR TAX is a good idea – because the other question to ask is about those individuals that collect more in government services than pay into any tax – not to mention the EITC tax scam.

    Like I wrote, a lot of “government services” are not provided for many rural folks. They take care of such things themselves – like trash disposal, armed protection of their property, and in the case of my family farm, they generate their own electricity.

    Granted not all farms (or “F”arms for that matter) generate their own electricity. I imagine that is rare. But, I admit … I don’t know. I have not studied that question.

    High-density urban settlements tend to have a great deal of “public amenities”, do they not?

    Take the “community pool” for example.

    In rural America such things are rare – or often far away from one’s home – so rural America pays their own way if they want a pool to swim in.

    Or, they pay to join a private pool at a commercial health club or YMCA facility. Some recreational facilities like this run by tax exempt non-profits, others being ‘for profit’ businesses. But in most cases they are not taxpayer funded.

    The high-density urban development often uses tax funds to offer free or minimal cost public pools to ‘the masses’.

    So, who pays what? – doesn’t that “fair share” also depend on what the family or individual paying the taxes receives in return for their tax dollars?

    I think calculating “fair share” is very complex.

  23. Larry Gross Avatar
    Larry Gross

    geeze.. come-on .. most farms could not afford to BRING electricity or phone to their farm entrances – it was all they could do – to pay for the lines/poles to go from their entrances to their farm.

    Who do we think paid to string the poles/wire into the country side so that it WAS available at the farm entrances?

    Who do we think paid to pave or gravel surface roads that farms use?

    I guess most folks don’t remember … GASP .. TOLL ROADS way back then…

    and we’ve paid.. higher than market prices for milk, cheese, butter, tobacco, and a host of other commodities..who do you think paid for the subsidies? It sure wasn’t the farmers.

    we could argue what appropriate public policy should be or not – but let’s at least agree on who paid for all that infrastructure.

  24. Groveton Avatar
    Groveton

    I don’t know the answer here.

    I live in Great Falls, VA. I have a well, a septic system, my street is owned and maintained by my neighbors and me and I pay to have my trash picked up.

    Two of my five sons go to public schools, two go to private schools and one is too young to go to school.

    How much do I cost the government?

    I don’t know.

    That’s the problem.

    People ask if I’ll pay tolls for roads, people ask if I’ll pay more in taxes for education and I have no idea whether I am being treated fairly.

    Reid says that farms are over-burdened by the government. Jim Bacon wants to know why I think southwestern Virginia should pay for my roads. Larry thinks the farms have been subsidized since Mr. Jefferson was in high school.

    And everything (literally everything) I read from people in Fairfax County says we in Fairfax are getting robbed blind by the state of Virginia.

    I once had the good fortune to work for a very wise man named Larry. Larry used to say to me, “Groveton, when you find yourself in a hole the first thing to do is stop digging”.

    I’m in a hole.

    Don’t know if I am being treated fairly.

    First thing to do is stop digging.

    No new taxes or tolls.

    Not until I am out of this hole.

    Not until I know that I am being treated fairly.

    You want people to support congestion tolls?

    Demonstrate that it’s fair. With numbers. Including all the taxes they currently pay and the cost of all the services they currently consume.

    Yes – it’s a complex question.

    It’s complex when the subsidiary I run has to account for our profits.

    But we do it.

    So should the state of Virginia.

  25. Jim Wamsley Avatar
    Jim Wamsley

    Location variable costs apply to residences, not to farms. An acre of farm or forest pays more tax then it gets in services. The posts on variable costs for services to farms are interesting. They are not a productive part of the discussion on location variable costs.

  26. Groveton Avatar
    Groveton

    Jim:

    Location variable costs should be applied to people not to residences or acres of farmland. Residences don’t tie up the roads going to work – people do. Farm acreage doesn’t want the same telephone prices as phone service costs in the cities – people do. And an acre of farm or tax doesn’t pay any taxes although its owners do.

  27. Larry Gross Avatar
    Larry Gross

    I agree with the premise that farms pay taxes that exceed the services they use.

    … “services” – what about infrastructure?

    if you look at the cost of providing electricity, phone and roads to rural areas – the very first thing you’ll find out is that most private providers will not provide infrastructure unless they can recover it’s costs with useage fees.

    This is why cable TV – to date – does not “do” rural ….

    Rural Co-opts did string poles and wire throughout our rural areas – but the government (other taxpayers) did provide capital via loans at lower than market rates.

    Otherwise – it would have been profitable for private electric providers to serve that market.

    Even today – there are disagreements about rural cooperatives and whether they receive more favorable treatment from the government (taxpayers) than their regulated competitors.

    Like I said – we can agree or disagree about what the appropriate policy should have been or should be now..

    .. but in terms of history – rural virginia did not get wired by private investors…. because of simple economics – it would have cost each farmer far more than they could haved afforded.

    Does anyone disagree with this?

    Now it turned out to be a boon for farmers – and actually contributed to increased productivity – a win-win for everyone …

    but don’t we need to recognize and acknowledge that in terms of locational variable costs – farms got subsidized?

    it would seem to me – that to get to the next step about residences – we need to concur about history.

  28. Ray Hyde Avatar
    Ray Hyde

    “I just wonder whether the government spends more per capita on people living in rural areas, suburban areas or cities.”

    I don’t know actually, but I’m pretty sure Arlington has the highest per capita tax payments, closely followed by Alexandria, and Fairfax. Assuming they have the highest per capita tax payments, we’d have to assume they have the highest per capita expenditures.

    If the urban areas are so much more efficient, then why are they more expensive, not just for government, but businesses and individuals as well? For business and individuals, EMR would say it is because demand exceeds supply, and therefore we need a lot more of such areas. That doesn’t explain why government services cost so much more, though.

    Your question about the government net, per area, is a lot more complex. I have not a clue.

    But, your list of subsidies needs to be contrasted with a list of subsidies for the city.

    Mass transit.
    Homeless Shelters.
    More police and security.
    Ladder trucks for high rises.
    Rent control.
    Water and Forest shed to supply them with water and air.
    Sports emporiums and parks.
    City convention centers.
    Rural places to cart their garbage and sludge.

    ——————————-

    “An acre of farm or forest pays more tax then it gets in services.”

    This drives me utterly crazy. Assuming this is true, why should it be so? Whatever happened to paying true locational costs? Why should farms, which don’t have the income to pay extra to begin with, have to pay MORE in order to keep taxes lower for the residential sector. If we really want to save our farms and open spaces why, in God’s name, would we allow such a travesty to happen? It is a direct negative incentive.

    AND, at the same time, we hear people say all the time that their taxes would be lower still if we weren’t subsidizing the rich landowners with tax breaks on conservation easements and land use taxation.

    Why do I feel like I have a bulls eye painted on my chest? Those in favor of keeping farms around do so with the argument that they get to squeeze us, and everybody else thinks we should be squeezed more.

    —————————-

    I think groveton is right. No one really knows the answer, and no one is seriously looking to find out. I seriously doubt we would like the answer.

    Like groveton, I’m willing to sign up to some adjustments if we have the numbers. I’m not willing to sign up to agenda driven drivel.

    But, at some level of granularity, this idea of each pays their own way is nonsense. I have no idea what that level of granularity is. If A is being subsidized by X for B, and X is being subsidized by A for Y, then it might be cheaper to leave the black box alone than to arrange and pay for all the transfers.

    —————————–

    Better than 95% of farms are losing money, almost all of them depend on outside income. That income brings with it health insurance.

    I suspect that most farms at least try to break even on operating expenses. That means that the farm is profitable with regard to hired labor, equipment, fuel, fertilzer, seed, repairs, etc. But the land costs kill them,as fare as true farm profitability goes.

    Therefore the residence and land is rationalized as a sunk cost anyway, and it is supported by the off farm job. Since you have to live someplace anyway, the farm only has to justify its own expenses. Off farm jobs are a lot more useful to the farm if they are close by. What we call sprawl also makes off farm jobs more plentiful.

    Farms provide valuable and free amenities, and they pay extra for the privilege, as JW points out. They provide support to rural and far exurban communities by filtering the off farm job income through the farm. Frankly, I don’t see any reason to beat up on such people just because they drive long distances.

    ——————————

    “an acre of farm or tax doesn’t pay any taxes although its owners do.”

    “most private providers will not provide infrastructure unless they can recover it’s costs with useage fees.”

    Exactly. Exactly.

    Residences don’t pay taxes either, the owners do and they pay it out of income. Taxes should be based on the ability to pay. In that case the farms would pay no tax, since they make no money. In fact we would probably pay them for providing services to us that we don’t now pay for.

    As for infrastructure, all they get is roads and electric. But the roads would frequently be there anyway because they are on the way to someplace else. Besides, who does the road to town really serve? It serves the vendors in town as much as it serves the farms, no? Why NOT share the cost?

    Rural phones were for a long time party lines, HOV lines, if you will.

    Initial subsidies to get things sttarted look like losers ie “Development doesn’t pay.” But when looked at over a longer time frame they may make sense. The government has the ability and the obligation to look at things over a longer time frame than private enterprise.

    As Larry points out, Virginia did not get wired by private investors because it would have cost more than the individual farmer could afford, but now it is a win/win for all.

    I don’t understand why he can’t see the same is true for roads.

    Say the farms were subsidized for wire and roads. Who paid the subsidy? More urban places. But now, when an additional home is added, the poles and roads are at least partially there, so the next subsidy is smaller, and it was already paid in advance by the very same people who are now moving out there.

    And as soon as they get there they want to slam the door behind them, in order to prevent the place from becoming like where they came from, you know, those vibrant urban spaces that are so efficient and wonderful.

    So yes, private providers won’t provide service unless they can recover the costs in fees. That’s why they will cherry pick the heavily used roads. They’ll let government (read NOVA and HR) subisidize that famous guy in Farmville untill Boeing builds a plant there, then they will want a piece of the action they didn’t help create.

    I think we should stop wringing our hands about who is getting a bargain or a handout, and just focus on doing more of them, prioritizing them for the best return. It costs money now, but just as Larry points out, in the end it is a win/win.

  29. Larry Gross Avatar
    Larry Gross

    “An acre of farm or forest pays more tax then it gets in services.”

    If the farm is in land-use as much vacant land in Virginia is – I’m not sure the disparity is as great.

    I know beause I own a vacant subdivided lot of which I pay more taxes on it than a 100 acre parcel in land-use does.

    and I am getting NO SERVICES on that vacant lot – either as I live on another lot.

    So – what if I owned 100 vacant subdivided one acre lots?

    I’d be paying 100 times the taxes that someone who owned a 100 acre parcel in land use – that they might call a “farm” but, in fact, is vacant land being “hobby farmed” (no pejorative intended).

    In fact, I think most of us unconciously use the word “farm” to describe land that is not subdivided instead of recognizing most of it as vacant land – not “farmed land”.

    Why is this important?

    For a half dozen reasons not the least of which is a better collective understanding of any and all who profess an interest/concern with “sprawl”, taxes, landowner “rights” and the like.

    EMR talks about the need to get the vocabularly “correct”.

    I agree. Let’s get it right with existing land uses also and let’s start with the concept of “saving farmland”… verses “saving vacant land”.

  30. Reid Greenmun Avatar
    Reid Greenmun

    IRT: “And as soon as they get there they want to slam the door behind them, in order to prevent the place from becoming like where they came from, you know, those vibrant urban spaces that are so efficient and wonderful.”

    My family has lived on their farm for 200 years. It wasn’t a “hobby” – it was the sole source of income.

    My family PAID to have phone lines installed to the farm, back in the 1920s.

    The farm provides its own electricity and sells extra power to the grid.

    My family didn’t flee some urban utopia – but those Americans fleeing the failed urban jungles of New York City and Binghamton/Endicott/Johnson City are the ones buying up the small family farms in Harpursville. Our was 600 acres and it is now down to 300 acres – that is considered tiny in Broome County – upstate New York.

    My family fled poverty in the farming areas of the slavic regions of Europe. They came to the “New World” to start a business and make a living.

    They were able to do so until the corporate dairies began to merge into HUGE dairy firms, running out the smaller, local dairies (local milk processors & distributors).

    Once the mega-milk companies reduced competition they demaded small dairy farmers purchase expensive buld tanks because they would no longer send trucks out each day to collect the milk.

    Meanwhile, the taxes keep going up, and up, and up.

    The cost of “efficient” farm equipment kept skyrocketing – and the only way to buuy farm equipment was to borrow money from a bank – even used equipment bought at auction.

    Remeber the Jimmy Carter years? Remember interest rates of 18% – the perfect storm of rising taxes and the high cost to borrow money – combined with corporate mergers reducing smaller milk producers and thus competition – and the 200 year old family business was put out of business.

  31. Larry Gross Avatar
    Larry Gross

    Most farmers did not pay to bring the phone lines to their farm entrances. They probably paid to run the lines from the road to their house.

    Cooperatives were the usual way that phone lines were extended along rural roads – so that – THEN the farmer could run the wire from the road to their home. Cooperatives were subsidized.

    Your family may have paid for the whole distance from whereever power was available down the rural roads and to their house – but I do doubt it.

    (but if you insist it’s true – then so be it).

    No.. farms were not “hobby” way back when. I have ancestors who also farmed for a living – growing their own food and tobacco for income.

    I learned first-hand where pork chops came from… as well as fried chicken and scrambled eggs and calf brains… etc..

    Those days are gone.. for the most part.

    Folks who “farm” are not the same as FARMS and farming like any other productive enterprise – MUST change as efficiencies adopted by the competition change.

    so family farms went out of business the same way that other kinds of business models had to evolve and change or disappear.

    Most of us have a soft spot in our heart for the days when our grandfolks.. lived on and operated a farm as their means of livelihood.

    But those days are gone and now days when we look at larger, un-subdivided parcels of land – it’s not what they were once used for – it’s what they are used for right now..

    and my comment was that land that is not productive – in an economic sense – can and should be thought of as “vacant” land even if someone lives on it and even if someone plants “stuff” on it.

    When we are talking about new subdivisons taking away “farms”, I feel that it’s a bogus argument and I feel that we need to recognize that land that used to be farmed is not “a FARM” now and having settlement policies predicated on “saving farms” is not a sane approach land-use policies.

    I think we are fooling ourselves if we continue to view – former farms, now vacant – as potential viable farms that would be FARMS if we had land-use policies that protected them.

    There are not farms – not because of our land-use policies but instead because they did not successfully compete against other more modern FARMING models.

    It’s not like we’ve lost the products that farms used to produce because we’ve lost our farms.

    Quite the contrary – we got much more productive at farming and the folks who were committed to FARMING as a business enterprise – are still farming and still making a living at it.

    Other’s who were farming as a way of making a minimal living – were sqeezed out. It’s regretable but no more so than the folks who used to make buggy whips being squeezed out or Mom/Pop corner stores losing out to WalMarts.

    My main point here is for us to recognize the realities and not let nostalgia color our judgements.

  32. Anonymous Avatar
    Anonymous

    “and I am getting NO SERVICES on that vacant lot – either as I live on another lot.”

    Well, it is the same for me. I already pay full price for my home and house lot, then I pay more on top of that for the farm acreage, which gets, like your lot, essentially no services.

    Reid: I’m in almost exactly the situation you describe, family been here forever, farm once much larger, etc. My comments were directed to those who do flee, and then move to control those that were here previosusly. Those that wish to enact land use laws that don’t affect themselves.

    There are plenty of things I could do on the farm to bring money and jobs to the area, but they are against the law because I am nostalgically zoned only for agriculture. The difference with the bugy whip manufacturer or mom and pop store owner is that they were allowed to close up shop for whatever they could get. I am not allowed to close up shop on my open space/farm. The reason is that we value the open space for all of its other attributes, but we are not willing to pay what it costs to keep it open.

    Larry pays a lot more on his vacant lot than I pay on my vacant farm, but he is free to develop his lot if he chooses. I have no productive choice for my property other than what I do with it. So far as it goes, it is profitable in operating terms. If I chose to work at it full time, I could probably make a living, of sorts, but then, I couldn’t afford to own the land.

    “land that is not productive – in an economic sense – can and should be thought of as “vacant” land even if someone lives on it and even if someone plants “stuff” on it.” So what is the economic sense?
    Does is mean operational profit? Does it include the value it confers on neighboring property?

    I agree with Larry that having land use policies based on nostalgia instead of what is actually goin on is insane. heis right that we have not lost the products that farms used to produce because we’ve lost our farms. We’ve got plenty of farms, in other places.

    But here is where he falls off the wagon: “These are not farms – not because of our land-use policies but instead because they did not successfully compete against other more modern FARMING models.”

    That idea is just wrong. Twice. It is exactly our land use policies. It isn’t that they can’t compete against other farms, it’s that they can’t compete against development.

    If I only count what it costs to grow and operate the farm, then it is profitable. But if I include the full cost of the investment it represents then it is not and never can be: the land is too valuable to farm profitably even if you are the best farm operation in the world, and yet that is the only use allowed by the land use regulations.

    That is what is insane.

    “..it’s not what they were once used for – it’s what they are used for right now….”

    Exactly, and what they are being used for now is largley for benefits to others, not the owners. You here it at every public meeting “We have to keep our open spaces….”

    As if it was theirs to keep.

    RH

  33. Larry Gross Avatar
    Larry Gross

    …”the land is too valuable to farm profitably….”

    … but the market usually determines this – right?

    .. and there is really not a whole lot the government can do – no more than they can try to keep someone in business who thinks they can sell $4 pizzas and stay in business… right?

    any person can bring any kind of development proposal to BOS in Virginia whether that proposal conforms to their existing zoning or Comm Plan – and if it truly will be a benefit to that county – they would approve it in a lot of cases.

    Should folks who own land be able to develop it in any way that they feel benefits them?

    Well.. sure.. as long as they don’t need publically-provisioned infrastructure.

    There are lots of very well off folks who build long paved driveways to 3000 square foot homes with their own water/sewer systems.. pools, riding stables, etc and those folks pay all their own freight.. and don’t ask for nor expect publically-provisioned infrastructure.

    .. BTW – I own one lot – and it can only have one home on it – and it’s value is totally dependent on the housing market and county policies including whether well/septic is feasible …

    no guarantees… it’s a crap shoot.

  34. Anonymous Avatar
    Anonymous

    “Should folks who own land be able to develop it in any way that they feel benefits them?”

    Should folks who own land be restricted only to one use which is widely recognized as unprofitable?

    It isn’t the other farms you have to compete with, it is the other uses.

    It is true, any person can bring any kind of development proposal to the board. But, when the board has a long, consistent history of denying virtually everything, what’s the point?

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