Economic Development in the Age of CRT and COVID

george allen

by James A. Bacon

George Allen is no longer engaged in the turmoil of partisan politics. But as a Reagan Ranch Presidential Fellow with the Young America’s Foundation, he still gives a fair number of speeches. And when he does, he echoes the Reagan themes he championed as governor and then US senator: individual freedom, personal responsibility and opportunity for all.

Allen is not a fan of social engineering and the welfare state. The best social program ever invented is a job, he says. From this proposition flows another: a top priority of the Governor of Virginia should be to foster a business climate that stimulates private investment and job creation. And from this corollary follows another: Virginia must restore its economic competitiveness.

Once upon a time, in the 1980s and 1990s, Virginia had one of the most successful economies of any state in the country. The Old Dominion, which Allen dubbed the Silicon Dominion when he was governor, experienced rapid economic growth. Incomes rose, making Virginia the wealthiest state in the Old South. People flocked from other states in search of job opportunities. The state government has garnered national accolades for its professionalism and efficiency. Public schools were among the best in the country. It has sometimes been said that the public higher education system is the best in the country. The state has consistently ranked among the best in the country for business.

But Virginia has lost its competitive edge, Allen said in an interview with Bacon’s Rebellionand thanks to the policies implemented by the Northam administration, the state risks falling further behind.

The best word Allen can find to describe Virginia’s approach to the COVID pandemic is “stop.” “And that’s being nice,” he adds. States that have remained open like Texas, Florida and Tennessee have always been good for business. Their COVID policies have increased their economic advantage.

Allen laments the “coy acquiescence” of Virginians to Northam’s executive orders. “People dutifully and unquestionably submitted.” And even when Northam relaxed rules on masks and mandates, he says, local Northern Virginia “commissioners” tried to sue them. A former University of Virginia football quarterback, Allen described restrictions on outdoor sporting events as nonsense: High school athletes weren’t being hit with COVID. He notes with approval how some teams from far southwest Virginia played their games in Tennessee just to have fans in the stands.

Allen has received his vaccines and his COVID booster, but he disapproves of the government forcing people to get vaccinated. It tells the story of an encounter with a senior executive at Ballad Health, the dominant healthcare system in far southwest Virginia. The executive said the vaccine mandates were creating big problems for the company. Even before the pandemic, Ballad struggled to hire enough nurses. Making vaccinations a condition of employment in Virginia prompted many to quit. The company didn’t have that problem in Tennessee, which didn’t have a warrant.

But there’s more to eroding Virginia’s competitiveness than masks and COVID mandates, which hopefully are behind us. Allen doesn’t give much credit to CNBC’s list of best states for business that ranked Virginia No. 1 last year. He pays attention to General director magazine, which bases its ranking on criteria mentioned by people who decide where to invest business capital. And what do they care? Taxes top the list, followed by regulatory climate and talent availability. Virginia ranked 13th in the 2021 survey – “OK” in Allen’s book, but not great.

Allen also lends credence to the Rich States, Poor States 2021 report, which ranked Virginia 3rd nationally for economic outlook for the year ahead as recently as 2012, but ranked the Old Dominion at the 24th place last year.

I might add that all three surveys overestimated Virginia’s actual economic performance. Virginia’s cumulative GDP growth from 2010 to 2020 ranked 34th nationally. Cumulative in-migration ranked 37th as Virginia moved from a net importer of human capital to a net exporter.

Allen thinks Virginia has a good chance of improving its economic performance under Governor Glenn Youngkin. “He may not know how state government works, but he understands the economy and competitiveness. … He recognizes that the states we compete with – Tennessee, North Carolina, South Carolina, Georgia and Florida – are working to reduce the cost of doing business. And it is working to do the same for Virginia, as evidenced by its efforts to increase the standard personal income tax deduction and reverse the Regional Greenhouse Gas Initiative. Allen admits, however, that a Democratic-controlled Senate will not make Youngkin’s job any easier.

Indeed, Virginia has yet to see the full impact of actions taken during Northam’s gubernatorial tenure when Democrats ruled the state. Virginia’s K-12 public schools have yet to recover from the damage caused by the closure of schools for in-person learning during the height of the COVID pandemic. The “dumbing down” of education standards by the Northam administration has not helped. VSCollective bargaining for local government and school employees could put fiscal pressure on localities and “eat away” Virginia’s Right to Work law, which Allen sees as essential to keeping Virginia competitive.

Most of Allen’s opinions would be familiar to anyone who has followed his career. But one topic surprised me – Allen’s muted reaction to the focus on diversity, equity, and inclusion (DEI) at all levels of state and local government. He is a fervent believer in extending opportunity to all elements of society and supports the recruitment of underrepresented minorities into rigorous STEM disciplines. He touts the idea of ​​attaching green cards to STEM degrees earned by international students — everything needed to build human capital and make Virginia and the United States more economically competitive.

Won’t the infiltration of critical race theory into DEI as practiced by schools, colleges, government, and businesses in Virginia be detrimental to investment and job creation, I asked.

Allen finds the principles of the CRT, which advocates reverse racism to compensate for past racism, to be objectionable on philosophical grounds. But it’s hard to say what impact that will have, Allen says. After adopting ESG (acronym for environmental, social and corporate governance), many companies have adopted goals related to sustainability and social justice. Some may find the new “revival” in Virginia institutions appealing. Indeed, that’s essentially why CNBC, which for the first time included social justice criteria in its ranking of the best states for business, lifted Virginia to the top spot last year.

If the spread of CRT hurts the quality of children’s education, then it could outweigh any benefit gained by tapping into ESG-conscious companies. But it’s too early to measure the impact, Allen said. “We haven’t seen any measurements.”