Bacon's Rebellion

Democracy Thrives in Sunlight

We’re No. 1! We’re No. 1! (But Don’t Look Behind — The Competition is Gaining)

—

by

James A. Bacon
in

Forbes Magazine

has once again ranked Virginia as the “best state for business,” but the business pub declares that No. 5, Washington — home to Microsoft, Amazon.com, Starbucks and Boeing — is “the big story.” Washington, whose tagline is, “Innovation is in our nature,” moved up seven notches last year.

As for Virginia, here’s what Forbes writes:

Not that Virginia did badly–it just didn’t dominate the rankings the way it did last year. The state finished in the top 10 in four of the six main categories we examined. But in 2006, it finished in the top 10 of all of them. Virginia’s top attributes include an incentive environment that is the fourth-best in the country, according to Pollina Corporate Real Estate, a commercial real estate consulting firm, as well as an unemployment rate that’s the third lowest in the nation.

(See Virginia’s category rankings here.)

There was no acknowledgment of Virginia’s diminishing lead in Gov. Timothy M. Kaine’s press release or any of the self-congratulatory quotes from leading legislators. Any state that was serious about maintaining its competitive advantage would closely examine the categories where it lost ground and figure out what to do about it. It’s always possible that the Governor and the General Assembly leadership are doing that, quietly and out of the public eye. But judging by the tenor of the press release, they’re just complacent. (Hat tip to Peter Galuszka.)

On a brighter note, we should acknowledge that Virginia does do some things right. Additional evidence comes from a press release from Attorney General Bob McDonnell’s office, who cites Virginia’s No. 2 ranking in Directorship magazine for its “business liability climate.” Says McDonnell:

“Expensive and excessive litigation leads to higher costs for consumers, less jobs for our citizens, and slowdowns in economic growth. It discourages investment and has a negative effect on the expansion of the free market. Money that Virginia companies spend fighting lawsuits is money not spent expanding facilities, conducting research, and hiring Virginia workers. This ranking is a bipartisan achievement.”

Who’s No. 1, you ask? Nebraska.

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23 responses to “We’re No. 1! We’re No. 1! (But Don’t Look Behind — The Competition is Gaining)”

  1. Toomanytaxes Avatar
    Toomanytaxes

    I tend to agree with GMU’s Stephen Fuller, who suggests that an awful lot of our business prosperity depends on federal appropriations. Methinks the politicians are over pontificating. Watch what happens in 2010 and beyond. Whoever wins the presidential election will not spend as much money on defense and Homeland Security contractors as we have seen recently.

    What’s our competitive advantage besides proximity to the federal trough?

  2. Anonymous Avatar
    Anonymous

    Sure the proximity to the much despised Washington helps Virginia’s economy. But we are well ahead of Maryland which–at least the last time I looked–is just as close to that federal monster.

    How about Virginia’s rank of number 1 in the regulatory climate by Forbes? Now that is where government has a direct imppact.

    Can we improve? Absolutely! But taking momentary pride in where we are doesn’t amount to blind gloating in my book.

  3. Groveton Avatar
    Groveton

    Virginia has some advantages beyond proximity to the federal governemnt (which is a big advantage).

    For example:

    1. Public university system – still probably the best in the country. If you’re a smart kid in Virginia you can get a good education. However, in warning, I believe we are slipping here.

    2. Labor laws – Employers have all the rights and that what employers want. And, unlike California, non-competes are generally enforceable. This advantage seems like it will be in place a while.

    3. Low taxes – Even with federal “bracket creep” Virginia is a low tax state. However, in warning, this advantage is in serious jeopardy.

    4. Quality of Life – Despite all the carping on this site Virginia still enjoys a good quality of life – especially in suburban areas (relative to suburban areas in other states). For one thing, we don’t have an “urban basket case” (like Detroit) dragging the state down. This advantage is in moderate to high jeopardy as the transportation problems compound.

    Maryland has at least the same proximity to the federal government and it was ranked 12th.

    Virginia has been pretty successful in translating federal spending into private enterprise.

    Interesting (and sad) to see West Virginia ranked #50.

  4. Anonymous Avatar
    Anonymous

    Shhh — don’t tell anybody, but most of the things that put Virginia at or near the top year after year go back to the days when pro-business Democrats ran the place. Note I said “pro-business”. These days you have to hunt for pro-business Republicans.

    Their legacy includes the right to work law, tax uniformity (under assault now as homeowners clamor to pass the bill to business), Dillon’s Rule, the part time legislature, a strong public university and community college system, generally low and flat tax rates, spending restraint (the role of partisan competition in spurring spending is little recognized, but in one-party Va it was easier to say no) and lots of other things that add up.

    In a similar release about Virginia ranking number 2 on litigation and tort-related issues, Bob McDonnell talks about pro-business AG’s starting with Gilmore in 1993. But the Democrats that came before were equally conservative on litigation and liability issues.

    Good fiscal management and conservative government is a life-long tradition in Virginia, not an annual achievement.

    We will get bumped from number one, inevitably, but I doubt we will leave the top five any time soon.

  5. Toomanytaxes Avatar
    Toomanytaxes

    Spending restraint on the part of Democrats — right. Tim (I’m a friend of public sector labor unions) Kaine has already unraveled all of Mark Warner’s cuts in state employees. http://web1.dhrm.virginia.gov/itech/ftereports2.html

    What happens when the economy slows? Kaine will scream “structural imbalance” and ask for yet one more tax increase. I like some of Kaine’s policy decisions, but he cannot manage a turnip farm. We need to restore Warner’s job cuts and soon.

  6. Groveton Avatar
    Groveton

    Anon 3:53 –

    I was with you for a while there. The “pro business” label for Republicans in general is pretty ridiculous. Just like the “friend of the working man” label is pretty ridiculous for a lot of Democrats.

    But your examples?

    A strong public university?

    Wasn’t William & Mary founded by King William and Queen Mary? Were they Democrats?

    And UVA? Wasn’t that Thomas Jefferson? He was a founder of the Democratic-Republican Party as I recall.

    And Dillon’s Rule? Beyond being an anachronistic abomination it was the psychotic handiwork of John Forrest Dillon – a Republican I believe (at least he was a crony of perma-drunk Republican President Grant).

    Not sure about the Democrats taking credit for all that.

    And – since we’re using the “Way Back Machine” – who was in charge of Virginia when the state had the brilliant idea to promote the continuance of slavery and become a chief belligerent in the Civil War?

    Virginia has a lot of positives and a few serious negatives. I question whether any one party can lay claim to being hero or goat.

    Jefferson, as usual, had it right –
    The Democratic – Republican Party!

  7. rodger provo Avatar
    rodger provo

    To All-

    Virginia’s economic success has a
    great deal to do with massive funds
    spent in our state by the federal
    government being financed by debt
    that our grandchildren will have to pay
    off with higher taxes.

    Washington state’s success in
    aviation, computer marketing and
    technology and retail sales makes
    a contribution to that state, the
    nation and the world, given those
    companies sell many of their great
    products abroad – such as the new
    passenger jet recently unveiled by
    Boeing.

    I like the Washington state model
    for economic success.

  8. Anonymous Avatar
    Anonymous

    I wonder if Virginia does better than Maryland because of its proximity to the Pentagon? Who wants to cross the Legion bridge if they don’t have to?

    The Pentagon’s driving Federal spending. Perhaps that’s the driving force in Virginia’s dominance over Maryland

    I agree – once Defense spending slows the jobs will slow too. I already see a lot of contractors out there job hunting.

    And housing has gone beyond the means of most people to afford it. It’s just a matter of time before the big bubble bursts…..

  9. Anonymous Avatar
    Anonymous

    There’s another challenge coming this way that too few people are talking about: not enough kids in Virginia are attending and finishing college.

    According to the Governor’s P-16 Education Council Report, only one in five 9th graders in Virginia today will finish a college degree on time. (That means finishing their associate’s in three years or their bachelor’s in six years.)

    This is happening at a time where unskilled labor jobs are disappearing and the education requirements are expanding for jobs with salaries that will allow individuals to lead an independent and productive life.

    Other countries understand this and are making it a priority to inspire their young people to obtain a college education. When it comes to adults between the ages of 25 and 34 who hold a college degree, the US ranks only #7 in the world, according to a Sept. 2006 “National Report Card on Higher Education.”

    This goes a long way to justifying why the World Economic Forum’s 2006 report ranks the American economy #6 in the world in terms of competitiveness, lagging behind Switzerladn, Finland, Sweden, Denmark and Singapore. (It’s the first time ever that report has not listed the US as #1.)

    There are a lot of aspects to Virginia’s economic competitiveness that we should take great pride in. And there are threats that could change our dynamic in an instant, like a class-5 hurricane striking Hampton Roads or even moving up the bay and striking Northern Virginia.

    But we know that our children need a college education to compete and succeed in the 21st century – and we know that not enough of them are earning it. Changing that needs to be a bigger public policy priority.

    Jeff Kraus
    Spokesman, Virginia’s Community Colleges

  10. Ray Hyde Avatar
    Ray Hyde

    “ranks the American economy #6 in the world in terms of competitiveness, lagging behind Switzerladn, Finland, Sweden, Denmark and Singapore.”

    That’s quite a list. Don’t ALL of those places charge much higher taxes and provide far more social services than the U.S.?

  11. Anonymous Avatar
    Anonymous

    What is really fueling the boom is in NOVA and to some extent Tidewater. And, a lot of it has to do with non-Virginians or at least people who don’t make it a personal fetish to name their ancestors back to Jamestown. Indeed, the old White Anglo-Saxon elite of the ilk of the Country Club of Virginia really have nothing to do with this state’s being No. 1. History has bypassed them as they grow older and more irrelevant. Next: history’s dustpin and good riddance.
    What matter are these points:
    (1) Federal spending. Lots of right-wingers on this blog are going to hand-wring about Washigton’s money, but hey, it’s been here forever and it’s here to stay. As horrific as it was 9/11 opened the money spigot further for the Old Dominion. Take advantage of it.
    (2) God Bless Immigrants. Go to NOVA-ville and you’ll find newcomers of all types from India, Pakistan, Ukraine, Guatemala, Sierra Leone, Mexico, etc. Luddities on this blog like to blather on about illegal immigrants but these Neo-Know-Nothings are oblivious to the fact that exactly this emigres, legal or no, are supercharging the state’s economy, not sapping it as the Bowden-style blowhards would have it.
    (3) Taxes help. Yes, the state has a pro-business taxation policy that, in contrast to Maryland, lures business and encourages them to stay.
    (4) Schools, too. Virginia boasts of some of the best public universities in the country. Yet, they are affordable. Somehow, the right-wingers on this blog don’t get the point and want to cut academic spending or privatize U.Va. which would do little other than kill the golden goose.
    Many of these happy factors date back to the state’s leaders of three or four decades ago. They were ones with true foresight. M. Warner and Kaine mimic them to some extent. Let’s just be glad to bozos like Gilmore who have nothing to offer other than some anti-tax populism don’t have much of a political future.

  12. blue worker Avatar
    blue worker

    to leftist Anonymous

    what right do you have to tax me for someone elses college education?

    I work for a living.

  13. Anonymous Avatar
    Anonymous

    Every right to tax for higher education, you working stiff

  14. Jim Bacon Avatar
    Jim Bacon

    Jeff Krause, To what extent does the massive influx of unskilled, ill-educated illegal immigrants into the United States account for the decline in America’s educational rankings (percentage of adults between 24 and 35 with a college degree)?

  15. rodger provo Avatar
    rodger provo

    To All-

    Jim Bacon not all immigrants are unskilled, ill-educated.

    Jim, the rising cost of college education is contributing to the fall in those numbers for families are finding it harder to send their
    children to college and it is taking them longer to get a degree.

    Blue Worker society benefits from
    having an educated, trained public.
    We all benefit. Get real.

    Anonymous your right, but your harsh approach will win you few friends.

    Groveton, Toomany taxes and Ray
    Hyde you continue to march to your
    own beat.

  16. rodger provo Avatar
    rodger provo

    To All –

    Correction:

    Anonymous you are (not your) right,
    but your harsh approach will not
    win you friends.

  17. Jim Bacon Avatar
    Jim Bacon

    Rodger, For the record: I never suggested that “all immigrants” are unskilled or uneducated. In fact, I believe, legal immigrants tend to be better educated on average than native-born Americans on average.

    For the record: I quite agree that the rising cost of higher education is a major barrier to more people earning a B.A. I’ve blogged about that very topic frequently in Bacon’s Rebellionendeavoring to shed light on why the cost of higher ed has escalated so rapidly.

  18. Anonymous Avatar
    Anonymous

    Dear Roger Provo,
    Thanks for the compliment and sorry for the harsh style, but I feel it is necessary to overcome the veiled and not-so-veiled smugness, elitism and racism that waft through this blog. I have been a Virginia resident for years although I am no native and I am sick and tired of the would-be elite taking an accident of place of birth and somehow using that as a ticket to the exclusive nomenklatura.
    I have lived all over, including the real South, and I have never seen the kind of ancestral pompousity that still permeates the Old Dominion. It is particularly annoying since the state’s economy is really built on federal transients from all over.
    The harsh style may not win many friends, but hey, these aren’t exactly friends I want to have, anyway.
    Leftie anonymous

  19. Larry Gross Avatar
    Larry Gross

    I think the idea of thinking in terms of either getting a college education or not is not a modern view.

    The other industrialized countries know that it is technical training that is taking the place of non-college blue-color manufacturing jobs.

    Now days, a non-colledge-educated worker has to know and understand how a manufacturing robot works and how to correctly operate it – as opposed to him/her learning how to assemble the part by hand.

    This requires the individual to learn how technology works – and that requires a much higher level of reading and comprehension than we have typically taught in many of our schools.

    No longer.. will a minimal high school education get you a lifetime job on some assembly line somewhere.

    Instead.. even high-school only graduates have to understand how to effectively use computers and computer-driven technology if they are going to compete for a world job.

    CEOs like Bill Gates and others have been trying to get the rest of us to pay attention to this.

    A recent survey of USA employers said that fully 1/2 of their applicants – either though they graduated from high school – lack some of the basic skills needed for entry level jobs.

    I agree with those who have said that .. if we are going to worry about something… immigration is a gnat on a dog’s butt compared to our country’s educational competitiveness …

    I don’t agree that the problem is college… it’s jobs that don’t require college but do require a high level of reading and writing (which if you think about it – most college jobs… are really about having good reading/writing skills to start with).

    Community Colleges, workforce training – and kids who have a GOOD high school education is our challenge right now.. I think.

  20. rodger provo Avatar
    rodger provo

    Dear anonymous-

    Good for you.

    Virginians do tend to be smug.

    You are right about about the state’s economy which is supported
    by federal spending funded by the taxpayers of all of the 50 states, territories, etc.

    It is even more grim to listen to
    our leaders tout our economy when
    you consider federal deficit spending is the source of our success.

    This blog is dominated by a group with a narrow view of the world.

    Keep it up.

    Your comments make for some, good, interesting reading.

  21. Anonymous Avatar
    Anonymous

    Jim Bacon,

    What I can tell you – what the statistics support – is that the higher education attainment levels in Virginia have been the same for well over a decade, predating the current passion-filled debate over immigration.

    As Larry Gross pointed out, the problem is not necessarily about bachelor’s degrees. We are not getting enough of our children into higher education and getting them out with a degree or certificate.

    The challenge is not simply filling tech-related jobs created by the new economy. It’s keeping up with jobs like those in auto mechanics that did not used to, but now do, require higher education.

    It really is one’s ability to think, to process information and to communicate that will determine his/her success in the 21st century.

    Jeff Kraus

  22. Anonymous Avatar
    Anonymous

    “To what extent does the massive influx of unskilled, ill-educated illegal immigrants into the United States account for the decline in America’s educational rankings (percentage of adults between 24 and 35 with a college degree)?”

    JB, all you have to do to answer this one is to look at California’s education system, once first or second in the US, which is now in the lower levels thanks to years of massive illegal immigration into CA and at least 20 years of domestic migration OUT of CA.

    “In fact, I believe, legal immigrants tend to be better educated on average than native-born Americans on average.”

    This certainly used to be the fact but may not be true today for many legal immigrants for the simple reason that the single largest source of LEGAL immigration into the US is not selection for skills and education but for family reunification. Don’t think that this is just spouses and minor children. LPR and naturalized citizens may bring parents, adult children, and siblings into the US. These LEGAL immigrants may have little or no skills and education because these qualities don’t matter. What does matter is that a family relationship is there. These newly arrived LEGAL immigrants can in time start their own chain migrations when they become LPR and naturalized citizens. The US has had several amnesties of illegal immigrants over the last 21 years and has also taken in numerous refugees, all of whom tend to be lesser skilled and educated. All of these LPR and naturalized citizens are as entitled to bring their relatives into the US as the most skilled immigrants selected for their skills and education.

    “What I can tell you – what the statistics support – is that the higher education attainment levels in Virginia have been the same for well over a decade, predating the current passion-filled debate over immigration.”

    The fact is that high school drop-outs tend to be undercounted. When do you declare them “gone”? It would be quite interesting to know what those “statistics… for well over a decade” actually count. The percentage of HS grads who complete college? If so they will not reflect HS drop-outs. Needless to say, the illegal immigrants we are currently seeing and their chidren have a LARGE HS drop-out rate – in some cases around 50%. Naturally these are the folks who will cost more in support than they pay in taxes.

    “Luddites”

    The truth is that it is the folks who welcome large numbers of unskilled illegal immigrants into the US who are the Luddites. It is cheaper for AgBiz to choose, use, abuse and then lose cheap foreign labor, passing much of the costs of doing so onto the community at large, than it is for it to buy or rent labor-saving machinery. Naturally, as long as the open gates remain, there will be little incentive for AgBiz – and other heavy users of illegal unskilled labor, such as slaughterhouses – to fund or encourage new development of such machinery in their fields. A lot of Australia’s vineyards use machinery to harvest grapes. It hasn’t seemed to hurt Aussie wine.

  23. Anonymous Avatar
    Anonymous

    Anon 2:38 was Deena Flinchum.

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