When the textile industry collapsed, we did nothing.
When the furniture industry collapsed, we did nothing.
When the coal industry collapsed, we did nothing.
When the tobacco industry collapsed, we did something. At least Virginia did.
When 46 states reached their so-called “master settlement” with tobacco companies in 1998, most states used their money for health care. Some unwisely frittered it away to fill budget holes. Virginia, alone among the states, did something different. The following year, it set aside half the money – about $1 billion – as an endowment charged with creating a new economy in former tobacco-growing counties. This is the state’s so-called “tobacco commission,” which really has nothing to do with tobacco at all.
At this point, as a Virginia journalist, I am probably required to preface any mention of the tobacco commission with the phrase “the much-maligned.” It’s true that in the early days, the commission probably funded some projects that it shouldn’t have. In a 2014 interview with The Roanoke Times, former secretary of commerce and trade Michael Schewel suggested that maybe half the money was wasted because commissioners – mostly legislators – tended to view spending decisions through a political lens rather than a cold-eyed business lens. It was easier to say “yes” to a project than say “no.” In particular, there’s the classic, and infamous, case of the woman making jelly who had secured Ralph Stanley’s endorsement – and sought (and received) some commission funding to help her market Ralph Stanley-endorsed jelly. That’s nice, but that probably doesn’t help build a new economy for a whole region. I find that many people around Virginia still have that view of the tobacco commission – eyes sometimes roll, voices take on a more skeptical tenor.
I think that’s an outdated view, a case where perception has not caught up to the new reality. At the risk of sounding like a tobacco commission cheerleader – sis boom bah! – I’ve come to believe that the commission, at least how it’s been run lately, is actually something that ought to be duplicated elsewhere.
And that brings me to last week’s visit by Rep. Ro Khanna, D-California, the congressman who represents Silicon Valley. To recap: Khanna has made a name for himself by advocating that the nation’s technology sector should be more widely dispersed, that it’s not healthy for the country to have such huge concentrations of wealth and opportunity in just a handful of communities. He seems an unusual messenger: You don’t see the congressman from Detroit saying, “Hey, we’ve got too many of these car factories, you want one?” Khanna’s written a book on the topic: “Dignity in the Digital Age: Making Tech Work For All Of Us.” I wrote a column recently saying someone should invite Khanna to speak in Southwest or Southside. (Something I didn’t realize at the time: Some of my work when I was with The Roanoke Times is cited in the book’s end notes.) Khanna saw the column and, next thing you know, he was speaking last week in Blacksburg as the first speaker in our Cardinal News speaker series. That led to a unique opportunity: I got to ride with Khanna from the Roanoke airport to Blacksburg, and tag along on his tour of the Virginia Tech Corporate Research Center, where we met with some of the New River Valley’s tech entrepreneurs.
A point that Khanna made several times: “We need to be intentional about places that have been left out,” he said. “When those jobs left, textiles, manufacturing, we were not intentional” about growing a new economy in their place, he said. “We said the market will take care of things.” As we all know, the market sure took care of things alright – just not in a good way.
Khanna says in hindsight that was wrong – that government should have intervened, and still could.
“You can’t tell people ‘go move to the jobs,’” he said. “We’ve been telling people ‘go move.’ No one should be forced to move just because they want to have a good-paying job.” Khanna didn’t say it but that contrasts quite directly with former President Donald Trump’s approach. Trump, of course, was famous for saying he would “bring back” coal and other traditional industries, even if that was beyond his power. In 2017, though, Trump gave an interview with The Wall Street Journal in which he laid out a very different approach: “I’m going to start explaining to people: When you have an area that just isn’t working like upper New York state, where people are getting very badly hurt, and then you’ll have another area 500 miles away where you can’t get people, I’m going to explain, you can leave. It’s OK. Don’t worry about your house.” I was always surprised that that interview didn’t get more attention – and cause Trump more political blowback. In effect, he was telling people in many rural communities and small towns – his core supporters – that they should give up on their hometowns and leave. That never struck me as very consistent with “make America great again.” Instead, it was “depopulate rural America again.” Is that really what people in those communities want? As someone who grew up in, and still lives in, rural America, I sure don’t get that sense. My sense is just the opposite: People in rural America want their communities to thrive. They don’t want to move.
So here’s Khanna, a Democrat from Silicon Valley, making a case for rural America that the politician most favored by rural America sure didn’t make. And here’s where I pointed out to Khanna that there was one industry collapse where government did try to be intentional about supporting the communities where that industry was concentrated – and using its resources to try to build a new economy there. That was Virginia’s example with the tobacco commission.
In hindsight, the decision to create the tobacco commission seems pretty visionary. Let the record show it was also a bipartisan movement, originated by two tobacco country state legislators, Republican Charles Hawkins of Pittsylvania County and Democrat Whitt Clement of Danville, and signed into law by a Republican governor, Jim Gilmore. The commission’s first executive director, Carthan Currin, the grandson of a Franklin County tobacco farmer, likened it to a Marshall Plan for tobacco country.
Khanna seemed intrigued when I told him about the tobacco commission. “So how’s it worked out?” he asked me.
I much prefer it when I’m the one asking the questions rather than answering them, but here’s what I told Khanna: It’s hard to measure the tobacco commission’s success because we don’t know what the alternative universe looks like where there’s no tobacco commission. It’s easy to look across Southwest and Southside and say, “I sure don’t see a Silicon Valley or Research Triangle here, so the tobacco commission must have been a failure.” But what would those areas look like today without the commission’s investments? Probably a lot further behind than they are now, right?
I’m certainly not going to defend every project the commission has spent money on – commissioners probably wouldn’t either – but let’s look at the big picture. From the beginning, the commission was an early investor in broadband, long before it was fully understood how much the internet would revolutionize our lives. In all, the commission has helped pay for 3,000 miles of broadband across Southwest and Southside. That seems a pretty foundational investment.
The commission claims that its investments – often in the form of “deal-closing” funds and other incentives – have led to 27,100 jobs and more than $4 billion in private investment. Would those jobs and that investment have happened without the tobacco commission? We have no way of knowing. Even if most of them would have come anyway, we still must wonder about the rest: How many jobs would we have lost to North Carolina or some other competing state? Do we really have any to spare? I suspect not, right?
More recently, the tobacco commission has created a “talent attraction program” in which it pays off the student debt of recent college grads who agree to move to the tobacco commission footprint to take certain hard-to-fill jobs – typically in health care and certain technical occupations. The commission sees this as a two-fer: This helps fill those jobs; it also draws young adults to rural areas where populations have been declining and aging. State Sen. Chap Petersen, D-Fairfax, was so intrigued by this program that last fall he declared it was “the most innovative idea I’ve heard in 20 years.” So far, that program has helped pay for 299 people. If there’s any criticism, it’s that that number seems pretty small compared to the problem it’s trying to fix: We need something more like 29,900 new college grads in tobacco country, not 299. But you’ve got to start somewhere.
We may simply be too close to the tobacco commission to see what it’s trying to do. The idea of an endowment to help build a new economy in a place that has seen the old one collapse seems pretty novel. It makes me wonder if we need something similar for those rural communities that fall outside the tobacco commission footprint. I’m not sure where the money would come from – there’s no one to sue like there was with the tobacco companies. Conceptually, though, the tobacco commission seems a pretty good model. What would a tobacco commission look like in other places? What if there was a similiar endowment for former coal communities? Or former textile communities? Or, nationally, for lots of former this or thats?
In his public talk, Khanna held up two contrasting examples. “When West Germany and East Germany reunited, there was a huge effort to make sure East Germany had economic development,” Khanna said. By contrast, Great Britain did little to address the collapse of traditional industries. The result is a geographical divide that plays out in that country’s politics – a prosperous south, a not-so-prosperous north. That played out in Britain’s Brexit vote: Parts of southern England attributed their prosperity to the European Union and voted to remain; much of northern England blamed the European Union for their poverty and voted to leave.
The mistakes the United States made with respect to ignoring communities with collapsing industries are now decades old but can still be corrected, Khanna said. The details of how to correct them are a lot trickier. Khanna comes from the left of his party, and the stereotype is that a Democrat’s solution to everything is a government program. Interestingly, I never heard him say that. Instead, he repeatedly talked about the need for more private sector investment in rural America – “85% of jobs are in the private sector,” he said again and again. He talked about how many federal job retraining programs have been “inept” because they never asked the private sector what skills were actually needed. Instead, he talked about how the government can be a powerful convening force for private investment – jawboning, we used to call it. “Taxing billionaires and then handing out money” to rural communities “is an insult to their dignity,” Khanna said. “My appeal to the tech leaders is, if you don’t want this country to be divided you have to invest in these places.”
Khanna, who studied economics, has been called a “progressive capitalist.” His idea of “spread the wealth” is that the private sector should be the one spreading that wealth. I didn’t hear much in his talk that a Republican would object to. (Of the people I knew at his public talk who are or have been involved in politics, I saw more Republicans than I did Democrats; two of them sent me messages afterwards that expressed admiration for much of what Khanna had to say.)
For a guy from the nation’s technology capital, Khanna seems to talk more about manufacturing – although the line between the two is increasingly blurred. “We need to get production back,” he said. “I’m not ‘We’ll bring textiles back, we’ll bring coal back, we’ll bring mills back.’ I’m saying there’s a lot of other production. We need to make thick steel” – the type of steel used in wind turbines. Khanna didn’t say it but that seems a line of particular interest in Southwest Virginia, where the InvestSWVA economic development group has focused on trying to get a piece of the offshore wind industry supply chain. Coal country is full of electricians and welders and machinists; that seems a good play to me. “We need a mission of revitalizing the production capacity of the country,” Khanna said. “We have to figure out how to be a producing nation even if we don’t bring the old things back. … I think the pandemic was a wake-up call in this country. We weren’t making masks here. It wasn’t just that we weren’t making semiconductors but we weren’t making basic things here.”
So how do we be “intentional” about deindustrialized parts of the country, as Khanna kept saying? He offered at least two suggestions.
- Voters could demand more bipartisanship of their legislators to address economic issues. “Citizens can demand you go work with a Democrat or a Republican,” he said. Khanna pointed out that he’s currently working with Sen. Marco Rubio, R-Florida, on one bill related to manufacturing. And he added, unsolicited, that “I work well with Congressman Griffith” – Morgan Griffith, R-Salem, being the congressman who represents the district he was speaking in. (Maybe Khanna and Griffith could team up to figure out how to get that wind industry supply chain in Appalachia?) Khanna seemed to suggest that a lot of the “culture wars” American politicians fight are holding back the country. “China is not complacent,” Khanna said. “We don’t have a person or community to waste. They’re a billion billion people. They’re not fighting the social fights there, partly because they’re a dictatorship, but we need to be able to compete.” Cultural fights get in the way of that competition – and leaving rural America out of our economic prosperity makes it doubly harder to compete. Do we put our whole team on the field or not?
- Let’s not make education political. “Let’s not denigrate education,” Khanna said. “It’s been caught up in so much politics. In a global economy we want people to get as much education as they possibly can.” Again, it’s a competition thing. Not everyone needs a college degree, he pointed out, but we do need a more skilled workforce. I haven’t heard a single economic development discussion in the past few years that didn’t mention the need to raise the educational attainment of our workforce somehow — whether that’s more college gradutes or more people with credentials from a community college.
Previous trips have taken Khanna to Paintsville, Kentucky, and Beckley, West Virginia. He rejects the notion that rural communities don’t want or somehow can’t handle tech jobs. “In my travels,” he said, “people are desperate to embrace the future but the capital’s not there.” He heard that again during his tour of the Corporate Research Center. “A lot of venture capital is locked geographically,” Elliot McAllister, founder of Skyphos, told him. “They want you to move” to be closer to them. Nor do all tech jobs require people with PhDs. Skyphos does micro-3D printing for use in health care. “We want to be able to hire high school grads,” McAllister said. Here’s a case where more venture capital investment in a tech company would directly translate into jobs for people without some fancy degree.
So how can we break the pattern where just five places in the country (San Francisco, New York, Boston, San Jose and Los Angeles) account for nearly 70% of the nation’s venture capital investment? Is that where a tobacco commission-like entity could be helpful? We already have some state-run investment funds (Virginia has the Virginia Investment Partnership Corporation) – do we need more of that at the regional and local level? I don’t pretend to be an expert on that. But it does seem to me that what we need here is some creative thinking, and Khanna seems to be one of the few people on the national scene who is doing some of that. Let’s see what he can do with the example that Virginia offered up some 23 years ago.