Home Budget, Economy Great Article in RichmondBizSense on Northrop Grumman Move

Great Article in RichmondBizSense on Northrop Grumman Move

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This article is one of the first intelligent things I’ve read on Northrop Grumman’s decision to move its corporate headquarters to northern Virginia. As usual, the “mainstream media” (aka, the “corporate media”) has completely failed to explain what really happened here. Fortunately, Tom Bowden gets it.

is the move to Virginia as monumental as the headlines lead us to believe?

Three hundred highly paid executives will move from California to northern Virginia. Some empty space will be rented, homes will be bought and the ripple effect of the spending by these new Virginia citizens will certainly be welcome. We win! Go team!

But just as the announcement of the move started to fade as the news cycle moved on, I read this: “Northrop Grumman to lay off 330 people” at Fort Eustis.

So what just happened? Did we gain 300 jobs only to lose 330? Is this Northrop’s way of saying “thank you very much for the $14 million in tax breaks” that were, no doubt, a factor in their decision? Does this mean that 330 people, who yesterday were happily employed by the state’s newest Fortune 100 citizen, are now or soon to be on the street?

Answer: none of the above. This is a “teachable moment” on the danger of reading too much into sound bites and headlines about job losses and gains. And it seems to me that the entire process by which economic development agencies lured the headquarters to Virginia was political theater playing out in newspapers eager for headlines.

Bowden then proceeds to explain the economic impact of Northrop Grumman’s move(s) on the country (nil) and on Virginia specifically (minimal at best), as well as “the net effect of the tax giveaway” and the opportunity cost entailed by Virginia doling out this corporate welfare (key line: “If Northrop Grumman and other heavily recruited corporations paid the same taxes that our homegrown companies pay, Virginians – both corporate and individual – could enjoy lower tax rates or more services or both.”).  

Essentially, to the extent this is a big deal at all (and Bowden argues strongly that it isn’t), this entire should make the following people less than happy: libertarians; anyone who cares about good government; conservatives, and anyone else who believes in the free market; anyone who opposes corporate welfare and/or states getting into bidding wars over large corporations; small businesses, which generally aren’t the object of these bidding wars; medium-sized businesses, which also aren’t normally the object of these bidding wars; taxpayers; and people who rely on services provided by Virginia state government. Other than all those people, who probably constitute 99.99% of Virginia’s population, the rest of us should be celebrating Virginia spending $14 million to gain 300 jobs lose a net of 30 jobs. Or, on second thought, not.

  • I’ll push back a little bit, mostly because I’m forever scarred, I mean, aware, having grown up in the dying city of Pittsburgh.  (Yes, it’s a wonderful downtown, and a great little city, and I love it, but go five miles east or south and you’ll see that most of the region has never recovered from the 1980’s steel collapse.)

    Yes, the NG decision was mostly political theater.  And yes, the tax subsidies are less than fair to a free market, small business and 99.99% of Virginia’s population.  Plus, there is the question of asking what is the benefit of pitting one state (or the District) against another?  We aren’t the European Union, after all….

    Still, I think that political theater matters.  I also think coming from an area that was falling economically most of my life into one that has been rising most of my life shapes not only your individual finances, but also the way you see yourself as a person and your future in it.  It’s the creation of a narrative (and as a writer, I’m all about the narrative!) that DOES effect 99.99% of everyday Virginians.  And affects them in a way that we would be hard pressed to put a dollar amount on, regarding taxes OR spending on services.

  • NotJohnSMosby

    Not that NG moving their headquarters here isn’t good, but it’s not like they’re going to build a factory in Southside that will hire 5,000 people.  That would be a game-changer and a giant economic boost to an area that really needs it.

    Here?  A couple hundred six-figure jobs and a hundred or so support jobs is good, but in Fairfax, that isn’t exactly earth-shattering news.  You can’t swing a dead cat up here without hitting a well-off ironmongering Beltway Bandit, and another couple hundred of them won’t overly strain the breakfast bar at the Tower Club.  Hell, those execs were probably in town half the time anyways so they’re really saving a bundle on airfare and hotel stays.

    While I’m glad we landed Northrup, it won’t have an impact at all up here, which is why I’m glad that the Fairfax BoS told them to pound sand on the free road’s proffer.  Let them set up shop in Arlington, they’ll still buy their houses in Fairfax.