Have you been keeping up with the anti-gay merry-go-round in Virginia? Events have been spinning so fast that it’s not easy to do, but it’s a story worth discussing because of what it says about the state of our rights – not just in Virginia, but nationally.

A quick recap: Shortly after taking office early this year, Governor Bob McDonnell rescinded the standing Executive Order that forbade discrimination against public employees on a number of grounds, including sexual orientation.

McDonnell, who’d written a JD/masters thesis denouncing everything and everyone from working mothers to “homosexuals” (and something called “Democrats”) while at Pat Robertson’s Regent University, had clammed up about his homo-loathing during the campaign; he presented himself as a practical, pro-business conservative. But once elected, it was off to the races.

McDonnell claimed that the previous Executive Order, by including sexual orientation within its protections, granted rights that the Governor’s office had no authority to grant: This issue was for the legislature, he said.

McDonnell’s gay and lesbian wipeout emboldened State Attorney General Ken Cuccinelli , himself a natural law, anti-gay warrior.

Last week, he fired off a letter to the state’s universities, informing them that any policy they had prohibiting sexual orientation discrimination was a dead letter.

This turned out to be the tipping point; a colossal blunder that caused an unstoppable spiral of events against all of this old-school homophobia. Universities aren’t like state agencies, and their employees include presidents and professors who are used to, and need, a certain degree of independence and autonomy on policy issues, especially on issues like discrimination.

And there’s a practical dimension to their stubbornness: They know that their school won’t be able to compete for the best and brightest students if applicants perceive that the campus is unwelcoming, or medieval, in its outlook.

Reaction was swift, and not subtle.

A member of George Mason’s governing board declared the actions “reprehensible,” and made the quite sensible point that the AG could have just let the matter alone. I was proud that the President of my alma mater, William and Mary, released a strong rebuke that went about as far as it responsibly could: Taylor Reveley’s letter to the W&M community said, respectfully but plainly, that the College’s anti-discrimination policy “isn’t going to change.”

Reveley’s letter followed an angry and insistent on-line campaign by W&M students, and Virginia’s students didn’t stop there. On Wednesday, more than 1,000 students from Virginia Commonwealth University, located in the state capital of Richmond, took to the streets, and to the state house, in protest.

That did it. By Wednesday evening, the Governor emerged from his bunker to announce his new… Executive Directive! One that protects gays and lesbians from discrimination! Well, sort of.

An Executive Directive doesn’t have the same force as something called…an Executive Order. Here’s the difference, in a nutshell: an Executive Order would let the aggrieved party sue, while an Executive Directive provides less direct protection. A directive puts the power of the governor’s office, but not of law, behind the mandate. So an employee who has been discriminated against because of sexual orientation can’t sue, but the directive will still be a powerful disincentive because the offender will be disciplined, and perhaps even fired.

And the employee wrongfully discriminated against would get to keep his or her job.

Why the about-face? I’ll let McDonnell tell you: “[The controversy] has caused too much fear and too much uncertainty in the business community and the higher-education establishment and among young people in the commonwealth — and I simply won’t stand for that.” Note the order of concerns expressed: the business community comes first. What does this controversy have to do with that?

Plenty, as it turns out. Shortly after McDonnell’s Executive Order misstep, Maryland officials began stepping up their courtship of defense contracting firm Northrop Grumman, a very gay-friendly company that’s in the process of choosing between these two states as their corporate headquarters.

And then, according to an article in the Washington Post, savvy Virginia students have spent the week since Cuccinelli wrote his poison pen letter expressing their “concerns” about the climate to Northrop.

Business and students! There’s the lethal combination of interests that caused McDonnell to collapse. He’s politically astute to know that sexual orientation isn’t an issue for most younger voters – except to the extent that it’s a winning side for progressives – and once Jon Stewart (another W&M alum) stuck his skewer through the McDonnell-Cuccinelli kebob, the game was over.

None of this changes the way McDonnell thinks, of course. But he has his eye on higher office, and it’s a mark of progress, in a strange but unmistakable way, that the governor has had to retreat so visibly from his avowed social conservatism. All of that heat has warmed me up.

John Culhane is Professor of Law and Director of the Health Law Institute at Widener University School of Law in Wilmington, Delaware. He blogs about the role of law in everyday life, and about a bunch of other things (public health, sports, pop culture, philosophy and lots of personal stuff) at: http://wordinedgewise.org A fuller bio can be found here.