Steven Pearlstein: A call of action to Washington’s business elite. Do not fail to come.
Every month, a group of Northern Virginia’s top business executives meets for cocktails, dinner and private conversation at — where else? — the Tower Club in Tysons Corner.
A lot has changed in the decades since George Johnson, then the president of the small, struggling George Mason University, first convened the 123 Club, in large part because of the efforts of the men gathered around Johnson’s dining room table.
Because of the foundation they laid, Northern Virginia has become one of the richest and fastest-growing economies in the country. Northern Virginia is finally getting some of the money and attention it deserves from the state government down in Richmond. Tysons Corner, Reston and the Dulles Corridor were developed. Metro was built out into the suburbs. Dulles Airport was transformed from an isolated airport into a thriving domestic and international hub. And George Mason, where I now teach, has become the largest public university in the state and one of the up-and-coming state universities in the country.
These days, however, the 123 Club (which takes its name from the nearby state highway) is a pale shadow of its former self, lacking an agenda, strong leadership or a membership that packs much political clout. And in that respect, it is not unlike most of the other business organizations in the Washington region, including the Federal City Council in the District and the Greater Washington Board of Trade, whose ambition and influence have declined over the past decade.
In many ways, these organizations have become victims of their own success, having achieved what an earlier generation of leaders set out to accomplish 30 years ago. Many of our remaining problems — too much growth, wages and property values that are uncompetitive, too many high-skilled jobs that are unfilled — are the sort of high-class problems that most other regions would love to have. Without the urgency created by some crisis or long-term decline, business leaders have been free to focus their time, energy and money on building their own companies.
There are other reasons for the vacuum in business leadership in the region.
In the past, the backbone of these organizations were the presidents of local banks, utilities, retailers, construction firms and real estate owners and developers, along with the managing partners of the big local law firms. Because of two decades of mergers and acquisitions, however, many of the biggest homegrown companies have been bought up by out-of-town firms mostly either based elsewhere or whose leaders have no roots in region.
Meanwhile, the other big companies that have remained here or moved into the region have become so big and so national and global in their reach that their top executives have little time or instinct to get involved in regional economic issues. Such issues tend to be left to regional managers or vice presidents for external affairs who lack the visibility or the ability to commit their organizations to difficult or controversial initiatives.
Fannie Mae and Freddie Mac, two of the largest employers in the region, have been effectively turned into government agencies, while Sallie Mae has been stripped of much of its business and competitive advantage. And while it’s certainly a plus that most of the nation’s big defense and IT contractors are headquartered in the region, the ethic in that sector has always been to fly below the political radar and avoid getting entangled in region controversies. If you’ve never seen or heard of the chief executives of General Dynamics, SAIC or CSC, that’s just the way they like it.
To be fair, some executives have simply given up after years of trying and failing to get anything done. The hyper-partisanship and dysfunctionality that has paralyzed the federal government also has seeped into state and local politics, making it impossible to get the necessary compromises on difficult issues.
The nature of the economic challenges also have changed. In the past, many of the most pressing issues could be addressed within one state or locality. Northern Virginians were focused on fighting Richmond and building up Mason and the tech corridor. Those in suburban Maryland were constantly railing against the Baltimore focus of Maryland government while setting their sights on building up the university campus at College Park and developing a biotech corridor along Interstate 270. Business leaders in the District were forced to deal with a corrupt and bankrupt city government, a failing school system and endemic poverty east of the Anacostia.
Today’s big challenges, however, tend to be regional in nature, requiring cooperation across county and state lines. When consensus is easily reached, the region has been able to coalesce around efforts such as the buildout of Metro or the cleanup of the Chesapeake Bay. But too many other efforts have foundered on the shoals of short-sighted parochialism, rivalry and political pettiness.
If the regional economy was slated to grow over the next two decades as fast and as reliably as it has in the past two, perhaps none of this would rise to the top of anyone’s “to do” list. But the steady increase in federal spending and contracting, which has put wind in the sails of the Washington economy, is shifting and likely to create significant headwinds for the region. The investments and the structural changes needed to address those challenges, however, won’t happen unless the business community takes charge.
The reason is simple. Here and elsewhere, history shows that it is only the business community that naturally thinks in the long term, not just about getting through the next news cycle or the next budget year or the next election. On economic issues, only the business community can create the sense of urgency about challenges that, thankfully, are still a few years away. And only the business community can provide political cover for government officials who will need to raise taxes, divert scarce resources for investment and sacrifice parochial self-interest for the good of the region.
As it happens, a call to arms has been sounded by the 2030 Group, a new outfit that aims to do for the region as a whole what the 123 Club did for Northern Virginia a generation ago. The group’s president, Bob Buchanan, is a well-known real estate developer who persuaded 20 or so other regional business executives to each commit $100,000 to pay for some studies and begin to agitate for a more aggressive approach to the transportation, housing and workforce training challenges. They’ve got the ear of the District’s mayor and the governors of Maryland and Virginia, who under their prodding have resumed the tradition of quarterly meetings. A somewhat parallel and competing effort also has been launched by developer Herb Miller and former tech executive George Vradenburg, flying under the flag of the Chesapeake Crescent.
It is telling that the Board of Trade — up to now, the only genuinely regional business group — not only declined to take the lead in this effort when approached by Buchanan, Vradenburg and their colleagues, but has been working to undermine it. President Jim Dinegar takes the view that the Board of Trade should focus its time and effort on problems of more immediate concern that are more likely to be successfully resolved. As a large membership-supported organization, there is likely also a natural instinct at the Board of Trade to focus on issues where there is broad consensus among the membership rather than wading into the more difficult issues that are more divisive.
Indeed, the past success of groups like the 123 Group in Virginia and the Federal City Council in the District is that they were small groups of heavy-hitters operating largely behind the scenes. In my salad days, I was more than a little uncomfortable with the idea of a secret cabal of wealthy business executives muscling elected officials and dragooning other local institutions to push initiatives they thought would help their own businesses. Over the years, however, I’ve developed a rather healthy appreciation for the necessary and positive role such groups play.
The 2030 Group and the Chesapeake Crescent represent a start, but frankly their base of support is way too narrow in terms of geography (the “business community” of suburban Maryland remains largely a figment of the imagination) and sector (over-reliance on real estate developers). Their challenge — and they know it — is to take their efforts to the next stage by enlisting the support and involvement of a new generation of leaders of the region’s biggest corporations, universities, law firms and nonprofits who are willing to commit serious money and political muscle to accomplishing the hard things that everyone knows needs doing.
The list starts with a regional gas tax to support highway construction, Metro upgrades and expansion, new light-rail lines and express bus service and, yes, a new river crossing between Montgomery and Fairfax counties.
It includes a more regional approach to transportation management, including commuter trains that run from Prince William County to Baltimore through Union Station, the merger of the Baltimore-Washington and Washington airport authorities and regular fast-ferry service along the Potomac connecting Georgetown, the Southwest waterfront, Reagan National Airport, Alexandria and National Harbor.
It would entail an end to the counterproductive rivalries between Maryland and Virginia, and between Washington and Baltimore, that leads to bidding wars for corporate headquarters, federal facilities and foreign investment. A good place to start would be regional backing of a plan to move the FBI building from its unsightly fortress on Pennsylvania Avenue to a high-security campus in southern Prince George’s County. Another would be a joint effort between Montgomery and Fairfax counties to develop and market a collaborative biotech corridor.
Any strategy would certainly involve a regional approach to solving the regional skills match in which companies are forced to look elsewhere to fill most of their high-paying jobs while hundreds of thousands of local residents are unemployed or under-employed.
It would include a big push to wean the region off its over-reliance on government and government contracting by creating a vibrant commercial tech culture in the District and strengthening the competitive position of Baltimore as a port, an inter-modal cargo terminal and an efficient location for warehousing and light manufacturing.
And it would include a regional approach to housing and zoning to make it possible for more workers at all levels to find affordable housing and decent schools near to where they work rather than having to make the longest commutes on some of the most overcrowded roads in America.
The studies have been done. The local and regional governmental institutions are in place. The wealth has been created. What’s missing now is for the region’s top business leaders to make it happen.
I like the attitude taken by Beriah Wilkins, then-publisher of The Washington Post, in summoning the business elite to the red parlor of the Ebbitt House in 1889 to organize the city’s original Board of Trade. At the bottom of the letter he penned an addendum: “Do not fail to come.”
What’s your “big idea” for the future of the Washington regional economy? Send your thoughts . I’ll include as many as I can in the series’ final installment.