Exeunt Negotium

by Martin Harris

Back when we recipients of a Horace-Mann-designed 13-year graded-school public education (annual per-pupil cost, under $300) were getting towards the end of our lower-ed journey, we were getting a bit of Latin exposure from two sources: a pretty-much-mandatory year of Latin I and a definitely-mandatory introduction to Shakespearean stage plays, complete with such directions as “solus” and “exeunt”. The first becomes, in modern English, the “solo” originally made famous by pilots-in-training, and the second becomes the plural “all leave the stage”, an appropriate modern description for business (“negotium”) decisions to flee States they find too hostile in governance, taxation, and regulation. In that adverse-business-climate category, the phenomenon is now so widespread that such think-tanks as the American Legislative Exchange Council publish periodic rankings of the States for that political characteristic. Examples range from the former Rust Belt States of the Northeast, most of which, having been critically wounded by earlier business flight, (think Ohio and Indiana) have since taken aggressive steps to re-build their image; some which were nearly destroyed by events not entirely of State-government making (think Michigan) and States which, for unique reasons, have been able to adopt an anti-business posture without serious economic repercussions (think the Vermont Anomaly) even as the (mostly corporate) business decisions to focus elsewhere add up. Most States (think California) can ill afford the departure of major employers, taxpayers, and wealth-generators because they’re simply too large in terms of private work-force, the usual urban problems, and government-revenue essentials to shrug off major sector shrinkage, but some (think Wyoming and Vermont) are small (and non-urban) enough that they can experiment at the State House level with what, in the now-vanished Soviet Union, used to be called “the command economy”, one in which pols wearing newly-acquired expert-in-business-development hats presume to set directions for their States: think WY for emphasis on broad-band and Vermont for emphasis on captive insurance, much as Delaware, decades ago, decided to avoid excessive (in expert-pol opinion, that was) dependence on the DuPont presence by becoming a national best-place for corporate-head-quarters registration.

In Vermont, a trio of recent corporate shrinkages illustrates the continuing pattern of exit decisions: Entergy shrinking its workforce at Vermont Yankee; IBM shrinking its workforce at Essex Junction, while re-focusing new investment and employment at Fishkill, NY; and OMYA re-focusing its calcium carbonate operations from Pittsford VT to Escanaba, MI. Like earlier departures of Standard Register from Middlebury for its birthplace in Ohio, and a range of retailers leaving the west bank of the Connecticut River for the no-sales-tax New Hampshire east bank, all these departures and/or investment/employment shifts haven’t generated any serious “expressions of concern” from Vermont governance, ritual pro-forma “regrets” notwithstanding.

The Entergy decision to cut employment at Vernon is potentially the single-largest such re-positioning, not only because the company’s reactor-and-site investment (recently written down in value to reflect on-going political problems over continued operation (the Nuclear Regulatory Commission has said “yes” but the clearly-more-expert (just ask them) Golden Dome residents disagree and are openly demanding plant shut-down) is so large, but because it suggests to those with longish memories Vermont summer-resident/economist August St. John predicting, in the 1970’s and ‘80’s, that IBM would soon be focusing future investment away from its governmental-problem-scarred Essex Junction site to friendlier fields (Fishkill) in the Hudson River valley. The phrase he used for ending investment and shrinking employment was “withering on the vine”, avoiding a bluntly overt shut-down for image and political reasons, but steadily reducing its value until eventual disposal became easier. In that light, it’s worth noting that IBM, like Entergy, has never used the “exeunt omnes” (the “all leave” total shut-down option) forecast, but it’s now clearly on the corporate agenda in both Armonk, NY and New Orleans, LA. Instead, both are reducing employment by relatively small percentages while, perhaps, waiting to see whether public opinion might shift enough to change Golden Dome attitudes. They’ll be waiting (a little Humble Scribe prediction, here) a long time, probably longer than the remaining useful lives of either the Essex Junction or Vernon physical plants.

That’s because public opinion in VT hasn’t, so far been noticeably shaken by young-middle-class-family out-migration (root cause: inadequate job and career opportunities, by governmental design-intent, in a very high-cost-of-stay jurisdictional environment) statistically evidenced by remarkably low unemployment rates and remarkably shrinking public school enrollments; nor has it been shaken by the lengthening list of business re-focusings and outright departures. If the Letters pages in the State’s major papers are even a partial indicator, the new Progressive-Left electoral majority is quite pleased with existing patterns of State House climate-creation and the resulting business response: flight rather than fight. An even more telling point is the continuing in-migration of upper-income and/or-wealth cohorts, presumably not job-dependent, in numbers marginally exceeding the departures of middle-class middle-income households.

It’s worth noting, in this tabulation of business response to Montpelier-created business climate conditions, that Entergy is using language in advising its shareholders (your Humble Scribe is a minor one) suggesting (as did last years’ major write-down in the Vermont Yankee plant value) that such economies as the present minor reductions in labor costs are critical for continued operation. The Montpelier problem and the alternative (non) future of Vermont Yankee both go un-stated.