Virginia: Numero Uno!!! But for what?

Hog heaven for business interests?

Or…

Something more sinister?

The Iconoclast asks some awkward questions!

No. Miss Virginia did not just take top honors in the Miss America contest. While that would be nice, that would be just another beauty contest and not an appropriate topic for the “serious blogosphere journalism” that you have come to expect here at the Iconoclast.

What we speak of now is nothing less than serious business… "business" as defined by Forbes Magazine... arguably one of the world's most respected authorities on the subject.

Forbes Magazine also has a web-site at http://www.forbes.com that claims to be the “Home Page for the World’s Business Leaders.” Forbes Magazine and its web-site are reputable sources of all things "business" and especially all things “money.”

Forbes is known for its practice of publishing ranked “lists” of money related things like for example executive pay, Forbes 400 richest people in America, the World’s richest people, most expensive zip codes, etcetera, etcetera, on and on, adnauseam. Frankly, I think Forbes publishes these lists to give a little bit of spice to an otherwise very dry subject matter.

I understand that for many, money is never a dry subject… maybe it is just that Forbes is not my regular choice of reading material.

But anyway, how could I overlook the headlines in the August 16th edition of Forbes reading “Virginia: The Best State For Business” ?

Alright! We’re number one!

By Forbes standards, this was a “fluff piece” written in terms that even I could understand and enjoy.

Briefly, the Forbes ranking of all 50 states in America was based on 6 general categories containing a total of 30 “metrics” measuring the desirability of a state for business interests.

The 6 general categories included business costs, economic climate, growth prospects, labor, quality of life and regulatory environment.

In this ranking Virginia placed in the top ten states for all six general categories and in the top half of all states for all but 3 of the 30 metrics.

Pretty darned impressive if you ask me.

Having been born and raised and lived in Virginia my entire life, I generally knew that Virginia was a good place to call home and a state with many assets to be proud of… the mountains, the ocean, its historic cities, its beautiful country-side, its long and significant history, its contributions to our nations founding and growth… I could go on and on…

But to be honest, I don’t ever recall thinking that “I like Virginia because it is a good place to make money.” I would probably like Virginia as my home even if it were a bad place to make money. I guess that is why I am not a regular subscriber to Forbes.

But, the basic premise of the Forbes new list and Virginia’s “numero uno” position has got me thinking.

What does it really mean?

Is being the number one best state for business necessarily always good for all of us regular people who live here?

After some research, my findings were decidedly mixed.

Yes, there is an obvious correlation between a good business environment and the creation of profit for business owners and investors. Sometimes, but not always, that translates to good jobs and good wages to support workers, families and the community in general.

Did you notice that I said "sometimes" ?

Business profits do not always translate directly to good business citizenship.

Some businesses take more from the community than they give back. Some businesses provide jobs but they are not living wage jobs. Some businesses extract non-renewable resources. Some businesses create harmful environmental impacts. Some businesses abandon inner cities that got them started and move out to the richer suburbs. Some businesses become a burden on community infrastructure and never generate taxes pay for that burden. Some businesses expect that the taxpayers should subsidize their profits (AKA corporate welfare).

So, the point here being, business profits for owners and investors are not enough to conclude unequivocally that a favorable business environment is all good and never bad for everybody. That would be a far too simplistic generalization. As in everything, there are always winners and loosers.

In fact, there are some real interesting pitfalls to consider.

Some most interesting insights on these potential pitfalls are found in an arcane piece of research coming out of the Connecticut Center for Economic Analysis (CCEA) at the University of Connecticut entitled “The Economics of Ethics: The Cost of Political Corruption” published in February of 2004.

The basic thesis of this research is that political corruption is harmful to the public interests and carries significant economic costs for society in general.

No kidding?!

Most interestingly, while this research seems to have prompted by circumstances in Connecticut, it provides a ranking of political corruption on a state by state basis. The research document explains that the quantification of political corruption is difficult because “the perpetrators work so hard to evade detection.” However, it goes on to conclude that “…the number of federal convictions of public officials for crimes involving corruption is a good proxy for the level of political corruption across the states.”

This is where it gets real interesting for us Virginians. (Read this very carefully.)

It seems that the Commonwealth of Virginia, the same Virginia just came in number one in the Forbes list for the "Best States for Business" is none other than the same Virginia that came in number one in the CCEA ranking of states on Federal misconduct convictions per 100 elected officials for the ten year period from 1986 to 1995.

Not only did Virginia come in number one for the most political corruption during this period, its rate of Federal convictions of elected officials during that period (10.3 convictions per 100 elected officials) was nearly 5 times greater than the average for all states (2.12 convictions per 100 elected officials). Remember… this was for a ten year period. This is not a fluke.

When you compare the 25 best states and 25 worst states for business to the ranking for political corruption, it is really hard to see any correlation at all. This leads me to conclude that what we have here is "apples and oranges" or an inappropriate statistical comparison.

Given this problem, what can we to conclude from this unusual dual number one ranking for Virginia… "the best state in America for business" and the at the same time the most politically corrupt?

Are we to conclude that political corruption is good for business? Such conclusion would be sensationally provocative and obviously an oversimplification of a much more complex dynamic.

However, there can be no doubt that political corruption is not infrequently motivated by shady business practices aimed at making a quick and easy buck. Sad to say: this happens all the time... here in Virginia and elsewhere. Maybe here in Virginia far too often.

In the hope to glean more insight, we had one of our Iconoclast research associates contact directly the Connecticut Center for Economic Analysis to try to find out why Virginia is not just number one in political corruption but conspicuously in a league of its own and depressingly way ahead of almost all other states (only Florida and Maryland were even remotely close to Virginia for official corruption).

A knowledgable CCEA representative graciously offered the theory that it “probably was linked with the combination of a lot of opportunities for public officials to exploit economic development activities and contracting and weak state or local oversight.”

Very interesting...

That theory makes a lot of sense. Little official oversight combined with the temptation to make a quick, easy and crooked buck.

Going further in our research, we came across the May 28, 1991 speech by the then President of Czechoslovakia, Vaclav Havel, entitled “On the temptations of political power” delivered on the occasion of his acceptance of the Sonning Prize for his contribution to European civilization.

And yes, this does relate to the subject we are discussing.

The speech, opens with the thought provoking question: “Why is it that people long for political power, and why, when they have achieved it, are they so reluctant to give it up?"

He then goes on to explain that there are three basic motivations for seeking political power: the motivation of ideas for a better society, the motivation of self-affirmation the individual is making a difference, and the motivation of the perks that come along with political power.

Havel was appropriately humble when he said: “I feel compelled again and again to examine my own motives and ask whether I am not beginning to deceive myself. Might I not be more concerned with satisfying an unacknowledged longing for self-affirmation – a desire to prove that I mean something and that therefore I exist – than I am with pure public service?”

What about the privileges of office… you know… the perks… Yeah…the perks are nice.

On the issue of privileges of office Havel is poignantly circumspect… as if thinking about himself he said: “But where do logic and objective necessity stop and excuses begin? Where does the interest of the country stop and the love of privileges begin?”

Continuing he says: “Regardless of how pure his intentions may originally have been, it takes a high degree of self-awareness and critical distance for someone in power – however well-meaning at the start – to recognize that moment clearly. You get used to things, and gradually, without being aware of it, you may lose your sense of judgment.”

Mmmm. Something to think about…

The Iconoclast makes no pretense of being any kind of a “socio-political think tank” However it a sobering thought that my home state Virginia, the state that I love is, ranked number one in the Forbes list of the "Best States for Business" and at the same time number one for political corruption over an entire decade.

It bothers me that not only is Virginia ranked number one in political corruption for an entire decade, the incidence of political corruption is nearly five times the national average.

This is nothing short of disgraceful!

I would like to thank the CCEA of the University of Connecticut for their very informative research. I would like to also thank former President Vaclav Havel of Czechoslovakia (1989-1992) and the Czech Republic (1993-2003, where ever he is, for his thoughtful insight on the temptations of political power.

This issue of public integrity warrants further research and far more financial resources than the Iconoclast has available to spend on it. Thus the Iconoclast issues a challenge to all of Virginia’s fine institutions of higher learning to delve into the issue further and find out why Virginia is number one for lovers, for business interests and for crooked politicians.

Unquestionably our beautiful Commonwealth is exploding with economic opportunity. The temptations that former Czech President Havel spoke of are beckoning our political leadership. Inadedequate state and local oversight is sacraficing the greater public interest. Reform is needed. Virginia universities... step up to the plate and help find the way to higher public integrity.

Being number one is not all that it is cracked up to be.

This is not just one more beauty contest.


NOTE: The photograph accompanying this article has little or nothing to do with the subject of the article. It is just a picture of some pretty girls in a beauty contest. No suitable pictures were available of happy rich business investors or corrupt politicians who helped them get that way. So this picture was as appropriate as we could find. Thanks for understanding.