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byline: Bernie Niemeier

Predictable results – the incumbents, of course!

Last month’s elections turned out to be predictable.  All 140 seats in the Virginia General Assembly were up for election, but voter turnout was only about 26 percent — just over one in four registered voters bothered to show up at the polls.

The 40 members of the Virginia Senate serve four-year terms, and the 100 House of Delegates members are elected every two years. As a result, every four years all 140 seats are on the ballot at the same time.  Four years ago in 2011, voter turnout was 29 percent; four years before that it was 30 percent; going back to 2003 it was 31 percent.

The declining trend is clear.  During the 1980s and 1990s turnout for general elections usually hit 50 percent or higher.  By all accounts, a 26 percent turnout in 2015 is the lowest in modern history.

Let’s contrast these results to more popular election years. The 2013 gubernatorial race saw a 43 percent turnout and the 2012 presidential race prompted 72 percent of Virginia’s voters to go to the polls.

What accounts for these differences? In years with no national or statewide office on the ballot, voter interest is always lower.  Furthermore, low turnout is purposefully designed into our election system.

Many city council and school board elections are held in May to insulate them from statewide politics. The governor’s race is set for the year after presidential elections to insulate it from national politics.

Lower turnout always favors incumbent office holders.  Who sets these rules? The incumbents – of course!  Even when the rules are constitutionally proscribed, changing them requires that a bill first be passed by existing office-holders.

What about gerrymandering?  Twenty-one states use a nonpartisan or bipartisan redistricting commission.  Virginia is not among them.  Who sets our districts?  The incumbents — of course!  Regardless of party, the majority always works hard to tilt the electoral table in their favor.  Republicans do this — Democrats, too.  Electoral district boundaries are set just once every 10 years, following the U.S. Census.

Let’s look again at last month’s general election.  Before the first vote was cast, these were the choices:

Of the 100 House seats up for election, only 29 districts had more than one major party candidate on the ballot.  Forty-four Republicans and 27 Democrats were virtually assured of election due to lack of opposition.

Of the 40 Senate seats, only 20 had more than one major party candidate. Ten Republicans and 10 Democrats were assured of election.  In the remaining 20 Senate districts only a handful were considered to be truly competitive.

Given the lack of competition, the election results came as no surprise. Senate Republicans kept a 21-19 majority, exactly the same as before the election.  In the House, the Republicans lost just one seat, retaining a solid 66-34 majority.  That’s it — basically no change.

Whether or not one thinks change is needed, it is a distortion of democracy to have voting districts so narrowly sculpted that in the majority of races opposing candidates don’t even bother to run.

Statewide elections, where voting districts don’t matter, are distinctly more competitive.

In recent decades, Virginia’s governors, lieutenant governors and U.S. senators have been almost equally split between Republicans and Democrats.  The office of the attorney general bucks this trend. The post currently is held by a Democrat, but previously had been  held by Republicans since 1994.

Looking at presidential races, Virginia is a swing state, going Democratic in 2008 and 2012. By all accounts it will be a battleground again in 2016.

Who benefits from an entrenched General Assembly?  The incumbents — of course! More money than ever is flowing into political campaigns, which is ironic given how little it seems to alter the results.  Lobbyists also benefit from long-term relationships with career politicians.

Speaking of career politicians, retirement was the biggest cause of turnover in Virginia’s 2015 elections.  Four Republican and two Democratic senators retired. In each case the retiring incumbents were replaced by candidates from the same party.  In the House, four Republicans and five Democrats retired.  Five of these nine races featured only a single major party candidate.  Of the remaining four, three were won by members of the non-incumbent party.  A little competition seems to have gone a long way.

If a little competition is good, how can we get more?  Redistricting?  Term limits?  Right now, the governor’s office is the only one that isn’t allowed successive terms.

There are only two paths that can lead to these sorts of changes.  The first is through the General Assembly, which seems quite happy with the status quo.  The second is through the courts; that’s a tall order, largely requiring that the laws in question be deemed illegal or unconstitutional.

Regardless, federal and state courts both have Virginia redistricting cases pending.  Let’s hope that they turn out to be a little less predictable.

Millennials build communities but seem to eschew politics

Last month, I spent two days at the 5th Annual Cityworks (X)po in Roanoke, an event for which Virginia Business served as a sponsor.  The founder of Cityworks is Roanoke-based visionary and placemaking developer Ed Walker.

For most people, “placemaking” is probably a new term.  Cityworks defines it as “the process of creating vibrant communities and quality places where people want to live, work, play and learn.”

Walker and others have certainly done a lot in downtown Roanoke, renovating historic buildings into hundreds of trendy new residential spaces.  If you haven’t been to Roanoke lately, it has really come alive — a terrific example of placemaking done well.

To hear Walker tell it, real estate held in the right hands is a powerful game- changing force.  Property ownership rights, passed through English common law into the American legal system, largely determine the path of change, or the lack thereof, in our cities and towns.

The Cityworks crowd’s demographics are a bit different from the typical business-event audience.  They are mostly millennials, many just out of college.  They are interested in the arts.  The Cityworks (X)po actually bills itself as creating connections among social entrepreneurship, art, design, the outdoors, public health and social justice.  And, of course, like all good meetings, there is food and drink involved.  What would networking be without it?

Many in the audience came from outside of Virginia — to see Roanoke!  All in all, I’d say (X)po is a pretty good advertisement for the new Virginia economy, markedly different from what’s in the history books — cool, trendy, unexpected!

The placemaking that’s happening in Roanoke isn’t entirely new or unique.  Redevelopment and gentrification have been taking place for decades — think of Old Town in Alexandria. There also are entirely new livable and walkable places — think of Reston.  Historic tax credits and other programs have aided numerous locales around the commonwealth — Richmond, Danville, Staunton and others.

A new generation is reaching into smaller cities, places like Buena Vista.  As tobacco, textiles, furniture and even apple growing have receded from our economy, dormant properties — factories, warehouses and retail spaces — are ripe for redevelopment.  These are opportunities for this new class of entrepreneurial placemaking developers.

The ongoing evolution of a more entrepreneurial economy makes much of this possible.  Business is rebounding, and jobs lost in the recession are coming back in a different form.  There are more small businesses, many started by displaced workers reinventing themselves as business owners.

Redevelopers like to talk about buildings having “good bones.”  There are lots of properties with good bones across Virginia. 

The suburban lifestyle of the baby-boom generation has met its outward limits and is now on the retreat.  A new generation of millennials — looking for places to simultaneously live, work and play without a commute — is moving into urban-centric environments — cool, trendy, unexpected!

One thing that seemed to be almost entirely missing from my (X)po conversations was politics.  While a handful of people in the audience had actually run for office, elections and lawmakers just didn’t seem to be on the minds of these new placemakers.

Think about it — the millennial generation has never known a time when government was not dysfunctional.  Earlier generations had their Kennedys or Reagan who fomented change on both sides of the political spectrum.  But what has happened since?
In the two most recent presidential elections, the youth vote has tipped heavily to Barack Obama, but promises of hope and change perhaps have given way to a jaded realization that a president without a supportive Congress only leads to partisan gridlock, rhetoric without results.  Low voter turnout in non-presidential elections has further accentuated this problem.

Ironically, government programs have made much of this new placemaking possible.   Historic renovation tax credits on the state and federal level, and the Virginia Main Street community development program are examples of how government has enabled private-sector redevelopment.  If government has the power to help business, we ought to give it serious attention.

This is election month.  By the time you read this column, every elected seat in Virginia’s General Assembly will likely have been decided. 

Next year, we will elect a new president and in 2017 a new governor.  Making your vote count is good for business and good for our communities.  Regardless of your generation or political affiliation don’t miss this opportunity for placemaking.

Employee reviews – passé and in the way of better results

The home stretch of 2015 is here.  As business begins in the fourth quarter, thoughts naturally drift toward the year’s accomplishments.  For most managers and employees, this likely includes individual performance assessments.

Often dreaded and anxiety inducing for everyone involved, annual reviews became a business staple in the 1960s and 1970s as corporations scaled up, creating conglomerates through mergers and acquisitions.

Performance reviews were viewed as helpful in managing significantly larger numbers of employees.  This also led to the ascendency of bigger, more powerful human resources departments.

Throughout business history many have worked to improve these reviews.  I certainly have.  As a younger, more analytically focused manager, I tried just about everything from basic management by objectives, to five-point scales, to values-based assessments, peer-to-peer ratings and 360-reviews.  Nothing really ever seemed to work very well.

Apparently, I’m not alone in this experience. According to a late-2014 National Public Radio story, most human resources departments give even their own review process below-average marks for effectiveness. And Samuel Culbert,  a UCLA management  professor, has gone as far as to label employee reviews as “fraudulent, bogus and dishonest.”  In the pages of The Wall Street Journal, Culbert called them, “One-sided forms of employee intimidation that breed defensiveness and tension.”

On hearing this, I decided to toss out Virginia Business’ review process.  The staff heaved a sigh of relief.

Our handbook now reads, “Reviews are stressful, time consuming and counterproductive to more regular communications concerning job skills.”  It goes on to note that each employee receives ongoing feedback from supervisors, peers and customers and that we should all seek to cultivate a culture of “active mutual support.”

Problem solved?  Kind of. Like any other company we still deal with occasional performance problems.  I’m hopeful that this approach allows us to handle issues a little more effectively with less procrastination while waiting for an arbitrary review date.  And maybe, just maybe, we are an even better place to work.

Again, we’re not alone.  According to one study cited by The Washington Post, 6 percent of Fortune 500 companies have done away with employee rankings. Accenture has announced that it will do away with once-a-year evaluations in 2016. Other large companies, such as Microsoft, Adobe and Deloitte, have eliminated or dramatically simplified their reviews.

Reducing tension and defensiveness at work sounds like an opportunity. What should take the place of effort devoted to annual reviews?  How about more time spent listening to customers?  It’s always good to get outside of the building and see what’s happening in the marketplace.

Lately, we’ve been conducting business roundtables. This includes one with businesses in Northern Virginia hosted by the Fairfax County Economic Development Authority.   In September, we held our annual Economic Expectations Roundtable, hosted by the Virginia Society of CPAs.  Just a few days ago, we sat down with several commercial real estate executives to discuss trends.  Coming up in November, we’ll host the annual Virginia Business Political Roundtable.

All of these sessions are designed to keep our editors in touch with business executives.  This translates into better content for readers and ultimately develops an increasingly effective audience for advertisers.

So if you aren’t happy with your company’s performance reviews, maybe it’s time to redirect that time and energy into more customer-facing activity.  You won’t be alone.  In fact, you’ll be in good company.  You might even be rewarded with better results.  Go for it!

For more on these and related topics in Virginia Business:

It takes a bike race

Back in the way-back machine — back to those late summer childhood days — bike riding was how we explored the neighborhood and had our fun.

My mother told my older brother that he and his friend had to let me ride with them, but when they passed the end of the driveway, their bicycles sped away, leaving me behind.  In some ways, maybe I’ve been chasing the big kids ever since.

Back to real time, I’ve been riding my (bigger) bike for exercise before breakfast most mornings.  I live just a few blocks from the Virginia Capital Trail, which ultimately will stretch 55 paved miles, connecting the state capital of Richmond to Virginia’s Colonial capital, Williamsburg.

Portions of this trail opened in 2005, but since then it has remained a hodge-podge of mostly uncompleted sections, especially in Richmond, where until recently less than a mile of the route was paved.

No longer. In anticipation of the UCI Road World Championships coming to Richmond in September, the Capital Trail is now a veritable beehive of construction activity.  Finally, after 10 years, the bike path is being completed.

In fact, much of Richmond, at least where the various bike race events will be held, is seeing asphalt laid and potholes filled like crazy.

Richmond Mayor Dwight C. Jones was quoted in the Richmond Times-Dispatch recently saying, “One of the good things about all the improvements that we have made is that we will allow those who are coming to visit us for the ‘Worlds’ to see and enjoy the improvements, but when they’re gone and the races are over, we’ll still have the beautiful infrastructure that’s been put in place and we’ll be able to enjoy it.”

Umhum … I thought we were paying taxes to keep the roads paved?  Shouldn’t that have been happening all along anyway?

Much of the Capital Trail follows state Route 5, in many places using the highway easement to cut right through the front yards of homes that face the highway.  This is much like what might have happened (and perhaps still could happen) with the expansion of U.S. 460 between Suffolk and Petersburg or with the addition of an intermodal rail yard at Elliston in Montgomery County.  Nobody likes having their lawn taken over, but this time, where are the protests?

You’d think with an estimated 450,000 tourists descending on Richmond for this month’s bike race, that somebody might be concerned.  Heck, where’s the Sierra Club?  You’d think that 450,000 more people putting pressure on the capital city’s aging infrastructure ought to be enough to endanger groundwater in Virginia Beach — that’s the basic objection raised for every other project from uranium mining in

Pittsylvania County to the Atlantic Coast Pipeline.  There’s no way that the city of Richmond’s sewer system can handle an additional 450,000 near simultaneous early morning flushes.  Not to worry. They’ll bring out the porta-potties, everything will be fine — just like the Redskins training camp.

Back to the Atlantic Coast Pipeline, here’s the answer: Put a bike trail on top of it!  Nobody will object.  Dominion gets its pipeline, Virginia gets its energy infrastructure, and the landowners get a new scenic byway.  That’s a triple-win if there ever was one.  Somebody should be thinking about that — you heard it here first!

Seriously, it is puzzling that seemingly insurmountable obstacles to upgrading Virginia’s transportation or energy infrastructure aren’t at all problematic for a bike trail.  Maybe it’s that it took 10 years.  Maybe it’s the urgency of a looming deadline for the bike race — go figure.

Maybe it is that Virginia’s General Assembly wasn’t involved. The city of Richmond only needed to put together a coalition of the willing — local businesses without state support — to bid on and win the UCI Road World Championships. The process didn’t involve any gerrymandering or voter identification laws, no education spending cuts or health-care expansion, no federal court appeals, not even any judicial selection or special sessions.  Sometimes, maybe all it takes is a bike race.

Vote ‘Yes’ for growth

What do Virginia, Texas, Utah, North Carolina, South Carolina, Georgia, South Dakota and Minnesota all have in common?  They’ve all been at the top of one or more “best states for business” lists during the past decade.

The most widely recognized lists are CNBC’s Top States for Business, Forbes.com’s Best States for Business, Pollina Corporate Real Estate’s Top 10 Pro-Business States and Site Selection magazine’s Top US Business Climates.

Virginia has been the runaway leader on these four lists, making it to the top 10 a total of 35 times in the past 10 years, with 12 appearances as the overall No. 1 state by one or more of these rankings.

Nevertheless, things have been more competitive lately.  In late June, the most recent CNBC list placed Virginia in 12th place, down from eighth in 2014, fifth in 2013, third in 2012 and first in 2011.  While it’s hard to say that placing anywhere close to the top 10 is bad, a declining trend is clear.  Other states are getting better.

Virginia’s top-ranking heyday began back in 2007 and 2008, when state rankings for economic development started becoming widespread in the business media.  At the time, much of the U.S. was plunging into deep recession.  Federal spending, however, was soaring to offset damages wrought by the mortgage-banking crisis and to support military buildups in Iraq and Afghanistan.  Virginia was a primary beneficiary of the increase in government spending.  Unemployment rates stayed below the national average, and job creation was relatively robust.

Contrast that with the past several years.  Budget cuts and a wind-down of military operations have reduced federal spending. While the commonwealth’s unemployment rate remains below the national average, recession-wracked economies in other states have grown faster during the recovery.

Delving into the 10 factors behind Virginia’s 12th-place ranking by CNBC, the commonwealth is strongest on Business Friendliness, scoring third in the nation; Education (sixth); Workforce (also sixth); Access to Capital (12th); and Technology and Innovation (14th).

Virginia scores in the middle of the pack (25th) on Quality of Life, Cost of Living and Infrastructure.

The commonwealth’s lowest scores are in Economy (36th) and Cost of Doing Business (37th).

Moreover, looking back to 2014 to see where our rankings have changed most in the past 12 months — Virginia has dropped seven places in both Economy and Cost of Doing Business and six places in Infrastructure.

Beyond reliance on federal spending, Virginia’s overall economy, cost of doing business and infrastructure are largely  functions of the state’s ability to pay for highways and provide funding for  education, economic development and other maintenance or growth-oriented programs.

A separate study by the Mercatus Center at George Mason University ranked Virginia 21st among the 50 states in terms of fiscal health.  This study looked at five factors: Cash Solvency (30th), Budget Solvency (29th), Long-run Solvency (27th), Service Level Solvency (fifth) and Trust Fund Solvency (15th).

These factors necessitate some explanation.  Cash Solvency is the ability to cover short-term obligations.  Budget Solvency is the ability to cover planned spending with current-year revenue; in other words, is there a budget shortfall?  Long-run Solvency looks at how much asset levels are above long-term obligations.  Service Level Solvency asks whether a state is in good position to raise taxes and cover shortfalls without harming the economy — apparently we are. Finally, Trust Fund Solvency looks at things such as unfunded pension liabilities, and, surprisingly, we are in relatively good shape there, too.

Overall, though, a combined ranking of 21st among all states just barely squares with our longheld self-perception of Virginia being above average on all things.

When it comes to economic development, Virginia has many assets that are unmatched by other states.  The Port of Virginia, Washington Dulles International Airport and our railroad infrastructure make the commonwealth an unbeatable gateway to the global marketplace.

Still, Virginia can get better.  The General Assembly has long taken pride in fiscal conservatism, but, thanks to the proliferation of such conservatism, Washington is now a less reliable source of growth.  More needs to happen at the state level. 

According to the Mercatus Center study, the good news is there is room to raise state revenues to pay our own way.  Being all about “No more taxes” is nice, until it means sacrificing needed services and losing out on economic opportunities.

Diversifying Virginia’s economy away from over-reliance on federal spending is much needed, as is a significantly higher investment in economic development incentives and more transportation funding.  Is there political will to do these things?  My vote is a resounding “Yes.”

Voting districts in play

In late May, the Supreme Court of the United States agreed to hear Evenwel v. Abbott, a Texas case that challenges the practice of creating legislative districts based on total population, rather than the number of eligible voters.

If successful, the effect of the appellants’ case would be to shift voting power from typically liberal, densely populated urban centers with more children and non-citizens, to more sparsely populated rural areas with a higher percentage of older, mostly white and more likely conservative voters.

The argument against using a total population approach in redistricting is that this method creates more districts in areas with higher populations but fewer eligible voters. That situation, the critics say, distorts the one-person, one-vote principle set by the Voting Rights Act of 1965. Larger numbers of voters, the

reasoning goes, wind up being represented by fewer elected officials.
There is a thread of logic in that argument, but elected officials always have represented the interests of more than just the voting public. Children and other non-voting persons have always been included in redistricting calculations throughout our history. 

The Preamble to the Constitution of the United States begins with “We the People,” not we the voters.
It is worth mentioning that those bringing this case are backed by the Project on Fair Representation, a Texas-based conservative group whose leadership has also been involved in cases attacking affirmative action and elements of the Voting Rights Act.

In defending the state’s voting districts, Texas Attorney General Ken Paxton, a Republican, argued that the plaintiffs, cite “no case where the Constitution compels states to apportion districts based on voter population… and multiple cases confirm that total population is a permissible apportionment base under the Equal Protection Clause.”  Nevertheless, the Supremes are scheduled to hear the case in October.

So, what does this have to do with Virginia?  In June, a three judge panel of the 4th U.S. Court of Appeals ruled by a 2-1 margin that Virginia’s congressional boundaries are unconstitutional because race was a predominant consideration, specifically packing black voters into the 3rd District to minimize black voting power in surrounding districts.  The court gave the General Assembly until Sept. 1 to come up with new boundaries.

Redistricting has been a hot-button topic with voters, less so with politicians.  Nonpartisan redistricting might eliminate the perception of foxes in the henhouse, with politicians picking their voters, but it might do little to change election results.  Much like the Texas case, geography is destiny in politics. 

Regardless of how voting districts are drawn, rural areas generally tend to be more conservative and urban areas are more liberal.  Getting the foxes out of the henhouse won’t change how people vote.

Racial disparities draw much attention and rightfully so.  Still an equal or perhaps even more powerful political dynamic is the interplay between rural and urban interests.  Rural areas long have been losing population to metro areas.  For decades, rural Virginia has been clinging to the remnants of its political power.

Population shifts may be the first step, but politics are played out, not just in voting booths but also in the statehouse.  Virginia distributes much of its general fund revenue to the localities based on formulas set by statute, in many cases unchanged for decades.

State funding for transportation, education and health is distributed in ways that are always complex and often arcane.  Among other things, the various formulas account for local income or ability to pay, highway miles, congestion and ability to provide matching funds.  In most cases, the result is a shift of tax dollars from higher-income, more densely populated urban areas to rural localities where less tax revenue is raised.

Other than their complexity, there’s little to argue with.  These formulas do what taxes are supposed to do by allocating funds based on local needs.  Still, in the political horse-trading that goes on to pass all kinds of legislation, keeping these formulas unchanged can be a prerequisite for rural legislative support.  The urban/rural dynamic also plays out in other areas such as the composition of the 18-member Commonwealth Transportation Board, which distributes funds for highway projects.

Going back to the redistricting issue, this magazine has long favored nonpartisan redistricting.

The federal appeals court’s recent ruling only puts the question back to the General Assembly.

OneVirginia2021, an organization promoting nonpartisan redistricting, plans to file suit soon in state court to compel lawmakers to follow the requirement set by Virginia’s constitution that voting districts be compact and contiguous.

Depending on the outcome of the Texas case before the U.S. Supreme Court, virtually everything we know about the composition of voting districts soon may come into play.

In politics, a chance to get things right is an increasing rarity.  Let’s hope this goes well.

Diversity is good business

In the summer of 1967, I had my first paper route. Making morning deliveries for the Richmond Times-Dispatch. I’d pick up my papers before sunrise from a bundle drop in front of the Westover Theater and deliver the daily news to about 50 customers along West 47th, 48th and 49th streets and Westover Hills Boulevard.

When there was enough daylight to read, I’d take a break, parking my gold Schwinn Stingray bike with its newspaper bundle-sized handlebar basket, bought with savings from my newspaper collections at Agee’s Bicycle Shop.  Sitting on a low cinder block wall at the corner of West 49th Street and Bassett Avenue, I’d read the morning paper while the news was still fresh.  This is when I first began to get hooked on the news of the day.

For most of a week in the middle of that summer, my interest was glued to the story of the Detroit riots.  For those too young to remember, Detroit suffered a massive race riot sparked by a police raid on an after-hours club.  Over five days, there were 43 deaths, 473 injuries, over 7,000 arrests, 2,500 stores looted or burned, and nearly 400 families left homeless.  City police, state police, National Guardsmen and U.S. Army troops were all called out to quell the violence. 

Simultaneous riots spread like wildfire through an additional two-dozen cities in Michigan, Ohio, New York, New Jersey, Arizona and nearby in Maryland.

In evenings after dinner, I’d collect the money due for my newspaper deliveries.  Going door to door with my collection book in hand, I knocked politely, cheerily announcing, “Times-Dispatch.” 

One night that week, a grizzled-looking older man in a short-sleeved plaid shirt slowly opened his door. I saw a shotgun leaning against the foyer wall beside a full case of shells.  My eyes widened as he explained, “I hear that busloads of [blacks] are on their way down from Baltimore and D.C., just making sure I’m ready.”  That was Richmond in 1967.

Not just Richmond, but also our nation.  Detroit came just two years after Bloody Sunday in Selma and just a year before the riots at the 1968 Democratic National Convention in Chicago.  Hindsight being 20-20, we should all hope to have since moved on.  But have we?

In 2014 and 2015 racially charged protests, in some cases outright riots, have occurred in Ferguson, Mo.; Berkeley, Calif; New York City; Cleveland; and now, Baltimore — all because of allegations of police brutality.  Has much really changed during the last 50 years?

Recently, several states attempted to pass so-called “free exercise of religion” bills permitting discrimination against same-sex couples.

The reaction from large businesses was swift.  Accenture, Apple, Eli Lilly, Salesforce, Twitter, Yelp, even the NBA and NCAA all issued statements or took other actions in protest, potentially cancelling events and looking at other states for business expansion.  Chief among their concerns were fair treatment of their employees and the ability to attract a high-quality workforce.

Last month, the U.S. Supreme Court heard arguments on same-sex marriage.  Part of the argument against legalizing same-sex unions nationwide is based on states’ rights — let the individual states decide.  This is reminiscent of a history lesson that claimed states’ rights, not slavery, caused the Civil War.  Really?

Many significant milestones in the struggle against racial discrimination have been achieved through action by the legislative, executive and judicial branches of the federal government: the Emancipation Proclamation (1863), Brown v. Board of Education (1954), the Civil Rights Act (1964) the Voting Rights Act (1965), and Loving v. Virginia (1967). Resistance to nearly all of these decisions was based, at least in part, on states’ rights.

If all this had been left up to the states, what kind of country would this be?

The struggle for women’s rights also runs the gamut of civil rights.  An Equal Rights Amendment was passed by Congress in 1972, but later died in 1982 when it failed to achieve ratification by the minimum of 38 states.

Rights for same sex couples are now following this same trajectory, including significant court decisions being made in Virginia.  Later this month, the Supreme Court of the U.S. is expected to decide on same-sex marriage.

States’ rights seem to have come into conflict with civil rights so reliably that it is worth considering whether so-called states’ rights are being used as a thinly disguised excuse for prejudice.  Should states be permitted to allow discrimination?  I think not — and more often than not the courts have agreed. 

The U.S. Constitution clearly gives civil rights a higher standing than states’ rights.

Still it’s 2015, not the 1800s.  In Baltimore about 200 businesses closed and more than 200 people were arrested.  That is not nearly the same scale of destruction as Detroit in 1967, but it is hard to imagine why such events are still happening at all. 

Diversity is good for business.  It brings new customers and new ideas, fostering innovation and economic development.  Equal opportunity creates a more open workplace.  This makes both social and economic sense.

Revitalization of cities leading to growth

Not long ago, I was in Portsmouth for the Hampton Roads Chamber’s State of the City Portsmouth event.  Over 400 civic and business leaders gathered over lunch at the Renaissance Portsmouth Waterfront Hotel to hear Mayor Kenneth Wright report on the city’s progress in glowing terms — improved bond ratings, economic development, job creation and downtown growth, all creating considerable civic pride — lots of accomplishments.

Afterward, I took my time driving out of the city and circled downtown to see what the progress looked like for myself.  Portsmouth has a vibrant downtown cityscape on the water — new construction and renovated historic buildings, restaurants, retail and tourism, all combining in an excellent example of urban revitalization.

Leaving town, I headed west on I-264 and north on I-664.  Not surprisingly, there was an accident blocking traffic in the Monitor-Merrimac Memorial Bridge-Tunnel.  Fortunately, I was able to get off the highway at the last exit before the tunnel and reroute across the James River Bridge to Newport News.  Suppose I were a trucker trying to move containers from the port? But that’s another story.

Taking the scenic route, I found myself reflecting on the success of Virginia’s small cities like Portsmouth.  It wasn’t that long ago that there was talk of small cities in crisis, losing population, industry and tax revenue, perhaps reverting to town status and becoming part of their surrounding counties.

This wasn’t just a small-city or a recession-related phenomenon.  Starting in the 1980s and through the 1990s, many larger cities lost retailers, businesses and population to the suburbs. Richmond lost both Miller & Rhoads and Thalhimers, locally based regional department stores. Miller & Rhoads went bankrupt in a leveraged buyout. Thalhimers’ name disappeared after its sale to a national chain, In both cases, the downtown stores closed and were empty for years. This pattern repeated itself across the nation.

Shrinking cities were particularly problematic in Virginia with its 38 independent cities.  Outside of Virginia, municipalities that are separate from their surrounding counties are virtually unheard of; Baltimore, St. Louis, and Carson City, Nevada are the only three others in the U.S.  New York City with its five boroughs also resembles an independent city.  Needless to say, a shrinking urban tax base leads to economic problems such as supporting school systems and repairing aging infrastructure.

So what are the trends today?  Surprisingly, the latest U.S. Census estimates show growth returning to 28 of Virginia’s 38 independent cities between 2010 and 2014.  Why so?

Two big factors: 1) an aging population, and 2) the availability of state and federal historic renovation tax credits.

The influence of baby-boomers aging through their 60s is just as big as it was when they were in their 20s.  No longer raising children and carpooling through fast food drive-thrus on the way to and from after-school activities, suburban living has begun to lose its appeal to the largest of our generations.  Trading in commuting and yard work for a more sidewalk-friendly lifestyle seems like a pretty good bargain after decades in the ‘burbs.  Spin-off trends include farmers markets, independent restaurants, increased interest in the arts, more multi-family housing and declines in fast-food sales.

Virginia has revitalized many of its cities through the use of federal and state historic rehabilitation tax credits.  A 2014 study prepared for Preservation Virginia by the VCU Center for Urban and Regional Development identifies Virginia as a leader in such efforts for many years, ranking third in the nation in the total dollar volume of rehabilitation expenditures.  Tax credits through the state program of nearly $1 billion have stimulated almost $3 billion in additional private investment.

According to the Virginia Tourism Corp., our cities and towns have generated many accolades.  To name just a few: Charlottesville No. 1, Top 5 College Towns in America (Travelers Today, 2014); Chincoteague No. 1, America’s Happiest Seaside Towns (Coastal Living, 2014); Middleburg, Best Small Town Weekend Getaways (Southern Living); Richmond, Frommer’s Top Destinations for 2014 (Frommer’s); Roanoke, 10 Best Bike-Friendly Cities (USAToday.com, 2014); Staunton, America’s Favorite Mountain Towns (Travel+Leisure, 2014); Virginia Beach, Top 10 Art Beaches (Huffington Post Travel, 2013); and Williamsburg, No. 2 Best Historic Destinations in the USA (US News & World Report, 2014-15).

If you haven’t visited Virginia’s small towns or big cities in awhile, give them a try.  Who knows?  Now that the kids are grown, you might even find yourself moving back.

How’s business?

How’s business?  That’s a question I hear a lot these days.  Not so much as in asking about magazine publishing (going just fine, thank you), but as in, “Do you think the economy is getting better?”

Why is anyone even thinking about this question anymore? Should success be so falling-off-a-log easy that there’s no risk?  I don’t think so.

Let’s look at the economics:  The Great Recession met its technical end almost six years ago.  On Wall Street, we’re experiencing the fourth-longest bull market in history.  The dollar is at an all-time high against the euro.   Unemployment in the U.S. is running half the rate of most of Western Europe.

In Virginia, unemployment in December was 4.8 percent, well below the U.S. rate of 5.6 percent for the month.  Nearby states all had higher unemployment: North Carolina, 5.4 percent; Maryland, 5.5 percent; West Virginia 5.9 percent; and Tennessee; 6.6 percent.

The Port of Virginia, a bellwether of our economy, posted six months of consecutive profits in the second half of last year and is setting records for container volumes in 2015.

If you don’t think things are better, just what exactly are you expecting?

The lingering suspension of belief in a positive business climate has at least two probable causes.  First, the depth and length of the recession forced painful cuts, putting many people out of work, as well as causing the closing or consolidation of many companies.

A new generation of middle- and top-level managers has risen to prominence on the basis of their ability to cut expenses with little or no orientation toward building revenue.  Today, this generation of leaders, promoted for their skepticism rather than their optimism, is at the helm.

Secondly, we are in a protracted period of negativity in our political arena.  Despite much evidence to the contrary, people associate the state of our politics with the state of our economy.

Ironically, there is likely a negative correlation between the politics and business.   How about that big recession during the Reagan years or the boom cycle during the Clinton administration?  Both were caused, not by politics, but by economic cycles longer than the time either president spent in office. 

Unfortunately, economic truths are frequently overwritten by a revisionist history concocted by those seeking increased political clout.

This political grandstanding disproportionately affects Virginia because of our historic dependence on government spending.

There are few better examples of a state whose attitude — at best quietly cautious, at worst outright negative — toward federal initiatives belies its dependence on such spending programs for prosperity.  Thirteen of the commonwealth’s top 20 employers are in the public sector or are public-sector contractors.  Sequestration has hit Virginia hard.

Still, despite these unproductive headwinds, business is better.

Not long ago, I had the pleasure of speaking in Manassas at the Prince William Chamber of Commerce’s 2015 Excellence in Business Awards.  The requested topic: “The Future of Business Excellence in Virginia.”  I thought to myself, “Now, that’s a pretty big topic!”  Here are a few thoughts recycled from that evening’s remarks:

Virginia’s prosperity as a result of federal spending dates back to the New Deal of the 1930s.  Not surprisingly, the business model for government contract work is similar to winning military conflicts — define the mission, build the capabilities and execute on command.  It is no wonder that many retired military officers are successful executives in government contracting companies.

Diversifying into the private sector demands a new set of capabilities.  Creating a brand and marketing it successfully requires longer-term investments than bidding on pre-set contract requirements.  To thrive in the private economy, a company must establish itself outside of the bidding process.  Great marketing is more than an affordable luxury; it is mission critical.

Being successful in the private sector also requires the assumption of more risk.  It’s not enough to simply say, “We have the capability to build your product, give us the contract and we’ll get the job done.” 

In the private sector, a company takes all the risk, building its product first and entering the market carrying all the cost on its own balance sheet — without a defined customer demand or the safety net of  government contract payments.

The equation for success going forward also depends heavily on people.  It takes innovative talent to create high-quality products that go beyond giving the customers just what they asked for or contracted to receive.  Attracting talent necessitates clear and authentic leadership values; these always start to the top.

So, if you are uncertain about how business is going don’t be fooled or distracted by politics.  Take a look around.  Lots of companies are getting these things right, and yours just might be one of them.

March Madness

Welcome to The Big Book, Virginia Business’ annual compendium of list makers — who’s influential, who’s on the move and who’s well connected — generally speaking, the people, companies and organizations that are doing big things across Virginia.

The Big Book is always our biggest annual issue; just about everyone likes making or reading lists.  Our editors have been working madly for months, especially toiling over this year’s list of the 50 Most Influential Virginians. If you don’t see your favorite politician or university president on the list — don’t worry; we’ve excluded them to keep from crowding out other business and community leaders. If you’re not sure we have the right 50, what can I say?  We did our best, and there’s always next year.

The Big Book is also a great source book.  Check out our lists of largest public companies, private companies, law firms, accounting firms and contractors; fastest-growing firms; public and private colleges and universities; and on and on.  Throughout the year, people tell us this information helps their organizations with a wide range of sales efforts and development activities.

On March 12, we’ll celebrate the publication of this year’s Big Book with our annual Big Ball at The Jefferson Hotel in Richmond.  Each year this black-tie-optional event draws many of the who’s who from our lists.

The theme of this year’s Big Ball is March Madness.  Many Virginia schools were competing at or near the top of their basketball conference standings in mid-February, giving their alumni hope for a possible appearance in the NCAA Tournament in March.  Throw some school colors into your formal wear and come ready for fun.  Our sponsors, Williams Mullen, Bank of America Merrill Lynch and Dominion as well as our nonprofit partner, The Virginia Early Childhood Foundation, make this event possible.  Want to be a part of the party?  Give us a call to check on tickets.

Sports madness? Lately, I’ve experienced a little myself.  I recently developed a serious nagging wrist pain playing tennis.  My doctor prescribed an anti-inflammatory, but the pharmacy needed a “pre-authorization” that could take a week to get.

Not wanting to endure another week of pain, I asked how much it would cost to fill without insurance.  The clerk came back with an incredible answer: $1,020 for a 30-day supply!  Then, more calls to the insurer, an “exception,” and a co-pay price of $50.  Health care, now that’s some madness!

It seems there’s always more than enough madness to go around.  Take a look at history — from the Emperor Caesar’s assassination on the Ides of March, to the madness of Shakespeare’s Hamlet, to beat-generation poet Allen Ginsberg’s, “I saw the best minds of my generation destroyed by madness…”

The potential for madness runs rampant in Virginia politics.  Just look at how quickly the spotlight for scandal, alleged or otherwise, shifted from Republican Bob McDonnell to Democrat Joe Morrissey.  Perhaps sadness is a better descriptor than madness — both cases, very sad.

This year was a short session for the General Assembly.  The official calendar ended on the last day of February, and the veto session reconvenes mid-April.  It’s common for a couple of days of early March madness to be required to get the state’s budget passed.

Despite the short session, we’ve seen a perennial set of “brochure bills” blossoming.  These are designed to score points with voters in both parties on polarizing issues such as gun rights, health care, gay rights, the environment, immigration and taxes.

Rarely do such bills make it out of committee, even more rarely do they pass both the House and the Senate, but they are seen as especially important with all of Virginia’s legislators coming up for re-election this year.  Brochure bills fire up the electoral base in both parties by reminding voters of their likes and dislikes.  This year’s session will undoubtedly score some points, but it’s unlikely to move the ball very far downfield.  Now there’s some madness!

Oh, but I digress!  Yes, it was a mad rush to put this issue of the magazine together, and we hope that you enjoy our Big Book.  We also hope that you will join us for The Big Ball.   I’ll be adding a bit of tartan flair to my tuxedo, representing Macalester College.  I’m not sure where Mac stands in basketball, but when I was a student they started what became an NCAA all-Division record for losses at football — 50 consecutive games lost over five straight years.  As I’ve often said in this column, I’m hopeful we can do better.