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Scenario One: A Pessimistic Forecast for the United States
Fri, 03/12/2010 - 20:37This is the first in a two part series exploring a pessimistic and an optomistic future for the United States. Part Two will appear tomorrow.
I’m an old (76) 1950s type liberal, and have lived to see the election on the nation’s first mixed-race president, as well as some remarkable social change in the general status of women and ethnic minorities. The United States has a remarkable heritage of entrepreneurship and resilience in its democratic institutions. Yet there are cogent reasons to be fearful and pessimistic about our capacity to maintain our preeminence, at least in the medium run (10-15 years). I obviously hope I’m wrong, and look forward to attempts to undermine my thesis – including, tomorrow, my own.
Consider the numbers 17, 49 and 60. Seventeen is the real unemployment rate, not the “official” ten, when we take into account those dropping out of the labor force, or giving up. Forty-nine is the real percentage of home ownership, in our “ownership” society, not the 68 percent from the census. For mighty Los Angeles, the real number is 44 percent. The difference is the stupendous number of households whose equity in the house is less than they owe on the mortgage. This house of cards has increasingly been the engine of national growth. Sixty is the number of votes in the US Senate needed to stop a filibuster, and together with inept leadership, is responsible for the absurd failure of Congress and the effective collapse of collegial democracy.
Economists say we are in a recovery. What recovery? The small increase in house sales is due to temporary incentives, but including speculators buying up homes, many foreclosed, for yet greater inequality. The main gains in jobs, not fully offsetting wider losses, are in temporary construction tied to government-funded projects. The growth in jobs and the economy in the last 20 years has been in services, stuff we do for each other, and the main fuel has been the pyramiding of house values. That is over. How can we restore growth through more consumption if the majority of the population no longer has the resources to invest or spend?
By far the most destructive accomplishment of almost 30 years of restructuring has been the reestablishment of extreme inequality, the emergence and power of the ultra-rich, both “progressive” and conservative in orientation, to levels last seen before the Great Depression.
But perhaps the greater root of our malaise, and perhaps the downfall of the American Empire, lies in excessive globalization and the loss of our capacity to make stuff, the outsourcing of, first, manufacturing and now even of services. It is instructive that this is the same story of imperial Rome, although long dependent on its empire, by the time of its collapse it imported virtually everything from its tributary states. Its finances could no longer pay the Army which was largely made up of people from outside Italy.
I’d agree that the main hope in the economic arena is via the small entrepreneur, but they face the immense monopolistic power of ever-larger global capital. I’m proud to live in Seattle, which at least dared to fight back, as in the one and only US general strike, in 1919, and in the WTO protests in 1999. Perhaps this is not so surprising since Seattle still makes things: planes (Boeing), ships (Todd) and trucks (PACCAR).
The saddest irony is that even as maybe half of us celebrate a Black president, we have utterly failed to follow up on the political civil rights gains on the 1960s to incorporate Black Americans into the mainstream economy. The status of the Black male is, relatively, worse in 2009 than it was in 1969. I would not be surprised to see a reprise of the 1960s race riots. But it is also relevant to reflect on the declining state of the white male, suffering increased drop-out rates from high school, declining enrollments in college, all in the face of reduced job opportunities for the less skilled and educated, plus competition from immigrants, legal and illegal. Is it any wonder that both nativism and populism is rising anew?
One might dare to believe that large Democratic majorities in Congress would give us hope for effective responses to this national malaise. But I’d say the current Congress rivals the infamous 80th congress that Harry Truman excoriated, for its “do nothingness”. On the surface we can correctly observe that the Republican party, increasingly conservative, is more than willing to wreck the country in order to regain power.
But part of the problem is that we no longer have a conservative and a liberal party, in an economic sense. We have two bourgeois parties, with the “new” Democratic Party increasingly dependent on the wealthy educated elite as well as well-paid public workers, it long ago abandoned the working class and did nothing to constrain globalization and the rise of the toxic financial practices. Thus we should not be surprised that the populist know-nothing uprising could bring to power large numbers of proudly uneducated folks.
In the final analysis for this pessimistic scenario, the underlying culprit is the inexcusable failure of the US educational establishment, the astounding incapacity of our public and private schools to teach people to think and reason. And part of the reason for this incapacity is the excessive power of religion, which values belief over reason, in our culture. And this is why decadent Europe – aging and tax-burdened – could come out of this recession and malaise better than the United States. Perhaps we’ll see a reverse migration of surplus underemployed young Americans returning to their aging historic motherlands!
Richard Morrill is Professor Emeritus of Geography and Environmental Studies, University of Washington. His research interests include: political geography (voting behavior, redistricting, local governance), population/demography/settlement/migration, urban geography and planning, urban transportation (i.e., old fashioned generalist).
Photo: hz536n
Deconstruction: The Fate of America? - The Changing Landscape of America
Thu, 03/11/2010 - 20:17America is at a crossroads. Its current path is unsustainable. The deficit for fiscal year ending Sept. 30, 2009 was $1.42 trillion. The National Debt is $12.5 trillion with the debt ceiling just raised to $14.9 trillion. The National Debt has increased $4 billion per day since September 28, 2007. The Obama Administration projects trillion dollar deficits for years to come. It has bailed out GM and Chysler, the banks “too big to fail” , and state governments that cannot manage their budgets. They have given away billions for clunkers and caulkers, and rewarded homeowners who bit off more than they can chew. We owe China $894 billion, Japan $764 billion and the Oil Exporters another $207 billion. It is uncertain how long foreigners will continue to finance our debt.
There comes a breaking point at which the financial model is unsustainable and can no longer continue. For you and I, it is called bankruptcy. If we screw up financially, we are forced to declare bankruptcy. The courts offer protection until we can get our house in order but we are forced to stop spending. We solve our problems under Chapter 7 (liquidation) or Chapter 11 (reorganization).
DECONSTRUCTION
Cities can also be forced into Chapter 9 municipal bankruptcy. The City of Vallejo, California, population 120,000, filed for bankruptcy in 2008 after its politicians went fiscally berserk, paying the city manager $400,000 per year and its fireman an average annual wage of $175,000. Cleveland, Ohio declared bankruptcy in 1979 after defaulting on $15 million of bonds. (Seems trivial in this era of trillion dollar deficts). New York City avoided bankruptcy in 1975 when the teachers union forked over $150 million at the eleventh hour. These cities were forced to remedy their reckless spending.
States cannot declare bankruptcy. Nor can they print money like the federal government. The Legislative Analyst’s Office estimates California has unfunded pension obligations of $237 billion. California is flirting with junk bond status. If it loses its credit rating, it will no longer be able to fund its bloated operations. The Golden State then will become the first failed state. They will be forced to dismantle their regulatory bureacracy. California has over 500 agencies and many are overlapping. They have 250,000 state employees. Thousands will lose their jobs as the financial community imposes cuts the legislature will not make. Such down-sizing will become known as deconstruction. California may be the first state to deconstruct its government services but it will not be the last. The Pew Center for the States reported that state governments have more than a trillion dollars in unfunded pension obligations.
There is no better example than the City of Detroit. Once the home of Henry Ford and the American automobile industry, Detroit has fallen on hard times. Its population has fallen from nearly 2 million residents to less than 900,000 today. With a budget deficit of $300 million per year, Detroit can no longer provide basic services to its own residents. There are 33,500 empty homes and 91,000 vacant residential lots. More than 300,000 buildings are vacant or in shambles. It is estimated that 40 square miles of Detroit lies abandoned.
Twelve years ago, British urban historian Sir Peter Hall wrote in “Cities in Civilization” that Detroit “has become an astonishing case of industrial dereliction; perhaps, before long, the first major industrial city in history to revert to farmland.” Hall may have been prescient. This week, Mayor David Bing released the “Neighborhood Revitalization Strategic Framework," a landmark document that suggests that vast sections of Detroit be razed and returned to farmland, open space and nature. The report suggests the first organized and orderly deconstruction of a major American city.
The report envisons replacing entire neighborhoods with “Naturescapes” (meadows), “Green Thoroughfares” and “Village Hubs” that require fewer city services. But, it will require hundreds of millions of federal aid to finance such a major transformation, money the federal government no longer has to give.
In an era of trillion dollar federal deficits, there are no longer easy solutions. The shift of tectonic plates caused by the Great Recession have exposed hopelessly unsustainable city and state budgets. Swollen payrolls, duplicative agencies and inefficient municipal services can no longer be afforded. The deconstruction of government services seems inevitable.
In five years, will Detroit remain a cratered landscape of vacant buildings, broken promises, and smashed dreams? Or will a smaller, safer, more efficient city evolve out of its ruins? If deconstruction is successful in Detroit, it could serve as a model for many other governments as well, from City Hall to state capitols and all the way to the most bloated disaster of all, Washington, DC.
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During the first ten days of October 2008, the Dow Jones dropped 2,399.47 points, losing 22.11% of its value and trillions of investor equity. The Federal Government pushed a $700 billion bail-out through Congress to rescue the beleaguered financial institutions. The collapse of the financial system in the fall of 2008 was likened to an earthquake. In reality, what happened was more like a shift of tectonic plates.
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This is the eighth ninth in a series on The Changing Landscape of America written exclusively for New Geography
Robert J. Cristiano PhD is a successful real estate developer and the Real Estate Professional in Residence at Chapman University in Orange, CA.
PART ONE – THE AUTOMOBILE INDUSTRY (May 2009)
PART TWO – THE HOME BUILDING INDUSTRY (June 2009)
PART THREE – THE ENERGY INDUSTRY (July 2009)
PART FOUR – THE ROLLER COASTER RECESSION (September 2009)
PART FIVE – THE STATE OF COMMERCIAL REAL ESTATE (October 2009)
PART SIX – WHEN GRANNY COMES MARCHING HOME – MULTI-GENERATIONAL HOUSING (November 2009)
PART SEVEN – THE FATE OF DETROIT: GREEN SHOOTS? (February 2010)
PART EIGHT - THE FAILED STATE OF CALIFORNIA (March 2010)
Transit Oriented Development: If Not San Francisco, Where?
Wed, 03/10/2010 - 21:52“The Great Transit Oriented Development Swindle?” reads the headline in the Fog City Journal, one of the growing number of internet newspapers providing serious, professional web-based journalism as an alternative to declining print newspapers (and their often less than effective web sites).
The article does not directly answer the question in the headline, but certainly provides enough ammunition to what has become a commonly accepted mantra among planners and urban boosters. It reveals how transit oriented development (TOD) is often based upon fragile foundations that amount to an ideological swindle. It is important to recognize that the Fog City Journal is no right wing or libertarian organ. There is little market for that in the city of San Francisco. The leftish bent of the Fog City Journal, combined with author Marc Salomon’s unusually incisive (and footnoted) analysis makes this article noteworthy. It also seems clear that the author is a proponent of more transit service and funding, not less – even though he is highly skeptical about the current TOD craze.
Transit Oriented Development: The idea behind transit oriented development is that, in new, higher density developments, people use transit more and cars less. Transit oriented development has become a first principle of some, who seem to believe that cities can become vibrant in part by strangling new suburbs out of existence. Transit oriented development is at the very heart of the Obama Administration’s “livability agenda,” and is frequently cited admiringly by Secretary of Transportation Ray LaHood.
Eastern Neighborhoods: Salomon’s subject is San Francisco’s Eastern Neighborhoods, where transit oriented development is proposed. From the beginning Salomon identifies a fundamental problem: “Transit Oriented Development is predicated upon the notion that existing transit infrastructure is attractive enough such that residents of new units will take transit to work instead of drive. He continues: “The existing transit system, both regional and local, is not capable of handling existing demand.”
Salomon correctly notes that “San Francisco is not the regional employment center.” In fact, nearly 90% of employment in the San Francisco-San Jose area is not in downtown San Francisco. Indeed, Silicon Valley, not downtown San Francisco, has long been the largest employment center in the area and there are also major job concentrations in the suburban belt east of Oakland.
No Better Place for Transit Oriented Development: Yet, there are few places in the world better served by transit than the Eastern Neighborhood transit oriented development. The project is no more than a long walk from downtown San Francisco (Figure 1). Residents will be able to access frequent “Muni” bus services. The development would be well served by BART (the regional metro), midway between two stations, both of which access four routes. There are few places in the world where a non-transfer station serves that many routes. Salomon analyzes transit from the center of the development, the corner of Mission and 20th Streets.
Transit Oriented Development: Forcing Longer Commutes: Salomon’s concern starts with the recognition that these systems are already overcrowded. However there is more. Even with their heavy (and highly subsidized) loads, the virtually unparalleled level of transit service available from Mission and 20th cannot compete with the automobile. Salomon’s analysis shows that, on average, transit oriented development residents working at jobs at the 30 largest firms in the San Francisco Bay area would spend nearly 3.5 as much time traveling to work by transit than if they drove themselves. The best transit travel time would be more than double the auto travel time, while the worst would near five times (Figure 2).
Transit Oriented Development: Making Traffic Congestion Worse: Mirroring the research on the association between higher densities and greater traffic congestion, Salomon suggests that without substantial additional transit spending, transit oriented development “in San Francisco will most likely diminish transit reliability by increasing auto trips–the precise opposite of transit oriented development’s stated goals.” On this point, however, it is well to remember that no transit system has ever been seriously conceived, much less proposed or implemented that could provide competitive mobility between Mission and 20th and the dispersed employment throughout the San Francisco Bay Area. A transit system that reaches all of the dispersed employment in a modern American or European urban area at travel times competitive with the car could require annual expenditures that approach or even exceed the gross domestic product of the area.
Unaffordable Transit Oriented Development: But Salomon is not through. Insufficient transit service is only part of the problem. There is a fundamental problem with the thesis that “cities need to densify their urban cores to support greater densities of development.” But, he says, “this is predicated upon the assumption that housing in the urban core and periphery are fungible, that the core and periphery compete interchangeably for buyers.”
Unlike most urban advocates and the Secretary of Transportation, it is apparent that Salomon understands the first principle of “livability.” Livability requires affordability. In San Francisco suburb of Brentwood, for example, Salomon notes that the median house price is $298,000. Brentwood is located in eastern Contra Costa County, approximately 50 miles from downtown San Francisco. But there is no need to travel that far, since there is an abundance of jobs much closer.
This compares to a median price of $627,000 for an apartment/condominium near the proposed transit oriented development in San Francisco. Further, the house in Brentwood will be more than double the size of condo in the transit oriented development, as data from zillow.com indicates. Thus, the new home buyer will pay less than one-fourth the cost per square foot in Brentwood compared to the transit oriented development (Figure 3). The Brentwood household will also enjoy a backyard that would not come with a 23rd floor flat.
Lifestyles of the Few: None of this is to suggest that transit oriented development cannot be attractive. The mistake, however, is the outsized enthusiasm of its proponents. Like a Mini Cooper or sportscar, transit oriented development serves the needs and wants of a narrow niche market, but by no means anything close to the majority.
Salomon concludes:
In order for transit oriented development to check sprawl, prospective home buyers would be expected to make the choice between purchasing a $300K unit in Brentwood or a unit costing twice that much in San Francisco. Further, in order to check motor vehicle commutes, the assumption would be that someone paying that urban location premium would more than double their commute time by taking transit.
Simply stated, many of the claims of transit oriented development proponents simply do not “pencil out.” TOD residents will have to drive, unless their jobs are within walking distance. Further, in the dynamic economy that has developed in US urban areas, few can assume that they will always work in the same place. Most importantly, however, very few suburbanites could afford the tony TODs. That’s not a problem, however, since most of them are probably not sorely tempted.
Photograph: Market Street Toward the Ferry Building, San Francisco
Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”
Green Wash: The Church of Sustainability
Tue, 03/09/2010 - 20:54The term green-wash is used to describe something that has been promoted as 'green', but is not. Has the term 'sustainability' worn out its welcome as well?
I am a long time adviser to the board of Sustainable Land Development International. Like many other organizations, they market themselves as producing sustainable land developments through new technologies and methods in design. We often use the term “sustainable” in relation to a concept called the "Triple Bottom Line”: People, Planet, and Profit, endorsed by the United Nations in 2007 for urban and community accounting.
On March 11th, I will have the honor to be the keynote speaker at the California League of Cities conference in Anaheim. When I speak, it is typically on the topic of sustainable solutions. This time, I was astonished to learn that the term sustainability had become green-wash and that I should avoid using it!
Individual perspectives (or goals or agendas) can easily color the meaning of sustainability. For example, an environmental engineer might want to promote elements of land development that makes his or her career more important and personally satisfying. All of us have personal agendas that make our brief existence on this planet more meaningful, sometimes at the expense of others or even the very thing we are trying to promote. Often we unwittingly become our own worst enemy.
At one time our firm began a relationship with one of the largest environmental engineering firms. When we spoke to their engineers about reducing pollutants from rain run-off caused by development it became clear that their only agenda was to eliminate, not to reduce, pollutants. Eliminating pollutants on a land development certainly is possible, but would not be in any way financially feasible. This firm had built a reputation and won over some very large non-profit organizations that fueled their success. Surely the engineers had their self-esteem (egos) inflated. If the developments they designed had to be financially viable without huge non-profit subsidies, they surely would have failed — spectacularly. They were artificially sustainable. Our goal was to use their expertise to create methods that would not add a penny to land development costs compared to conventional construction. We believed pollutants could have been reduced somewhere between 10% and 30%, which would have a significant international impact. As we began to work together it became quite apparent that our agendas were much different, and the relationship withered. Their all-or- nothing approach was not a balanced one, nor was it sustainable.
Nearly two decades ago when I developed “Coving” as a method to design projects, my own ego got in the way of progress. At the time, the New Urban momentum had begun to grow. I aggressively compared the advantages of Coving to the grid form of traditional development as well as to conventional subdivision design. Reducing streets — "Coving" — by 20% to 50% without reducing density in comparison to a traditional grid certainly had benefits, but the attempt to push an agenda by reducing the importance of others agendas does not win friends, and New Urbanism had already won many converts.
Coving by itself is only a streetscape design method, nothing else. The efficiency of coving opened up new opportunities to create more functional and financially viable development. . Both coving and the traditional grid pattern rely solely on the performance of the developer and builders to construct to a high level of architectural and landscape standards. The New Urbanism expanded upon the traditional grid to include a strict standard that included many details. Coving remained only a streetscape design method, void of these details. In the hands of a substandard developer with builders who cut corners, both Coving and New Urbanism have resulted in some embarrassingly awful land developments, tarnishing both movements reputations. Coving, particularly because of its financial advantages, seemed to attract some of the worst culprits. Unfortunately, in land development the time from concept plan to enough of a built environment to see the “finished” product can be between two and five years. We had become our own worst enemy by focusing too much on the financial benefits of a design method and not enough on other aspects.
There were still some spectacular developments that resulted, but there was no mechanism in place to assure great neighborhoods. By the end of the 1990’s it was clear that “our agenda” needed to be modified. In an attempt to achieve a more sustainable world, we had concentrated on a singular goal, not a balanced approach. This meant we needed to step back and look at all the elements of land development to create a balanced approach where no one agenda held the others hostage. Ultimately this led to the creation of a comprehensive approach to land development we coined as Prefurbia.
Land planning today has become like a religion that requires unwavering devotion. But those who embrace only one approach as the ultimate utopian mega-metropolis design to solve all social ills are fools: There is no singular solution for land development. Not the New Urbanism, not Smart Growth, not Prefurbia. Good planning is not about pointing fingers. It is easy to blame the automobile, blame developers, and blame government. But it is up to those people responsible for growth — stakeholders such as the developer, builders, city staff and council — to determine the best possible path that will result in a legacy for future generations instead of a blighted project that served to fill the bank account of the developer.
It is also up to the stakeholders to investigate and learn the various options available for growth. If a city planning commission or council member does not have the time to learn the different land development options available today, well, they should step down and be replaced by someone who cares.
All of this brings us back to the term 'sustainability'. The dictionary defines it as 'Capable of being continued with minimal long-term effect on the environment'. Here is the problem: The dictionary does not include the long term affect on economics (affordability) and living standards. Did we create something great for the ducks, but an eventual blighted neighborhood, or a gentrified one exclusively for the wealthy?
My view of how to be sustainable is simple: Do our best to create places that will still be wonderful, livable, affordable, and environmentally responsible for future generations. If we do, we will have created places that will be sustainable, no matter what planning religion we worship.
Rick Harrison is President of Rick Harrison Site Design Studio and Neighborhood Innovations, LLC. He is author of Prefurbia: Reinventing The Suburbs From Disdainable To Sustainable and creator of Performance Planning System. His websites are rhsdplanning.com and performanceplanningsystem.com.
Jerry Brown: Machiavelli Or Torquemada?
Mon, 03/08/2010 - 21:21For more than one-third of a century Jerry Brown has proved one of the most interesting and original figures in American politics--and the 71-year-old former wunderkind might be back in office in 2010. If he indeed wins California's gubernatorial election, the results could range from somewhat positive to positively disastrous.
Brown is a multi-faceted man, but in political terms he has a dual personality, split between two very different Catholic figures from the 15th century: Machiavelli and Tomas de Torquemada. For the sake of California, we better hope that he follows the pragmatism espoused by the Italian author more than the stern visage of the Grand Inquisitor.
Like a good Jesuit, Brown certainly can be flexible. Back in 1978, for example, he worked against Howard Jarvis' Proposition 13, which capped real estate taxes. But once the measure was passed, Brown embraced it as his own. Indeed, he was so enthusiastic about the tax-cutting measure that Jarvis actually voted for Brown's re-election late that same year. A month after the vote a Los Angeles Times poll revealed most Californians thought Brown actually supported 13.
Brown also has shown his flexibility by throwing even loyal allies under the bus. Elected largely due to the electoral coalition constructed by his father, Edmund G. "Pat" Brown, Brown made a point of tweaking and restraining the expanding bureaucracy largely created by his father. He also took on the University of California and the welfare bureaucracy as well as agriculture, residential real estate and manufacturing giants.
This Oedipal battle reflected Brown's personal crankiness. He came into office, recalled top aide Tom Quinn, "questioning the values of the Democratic Party."
Ascetic and even monk-like, he rejected his father's "build, build, build" philosophy and embraced E. F. Schumacher's "small is beautiful" ideology. Like the 15th-century Florentine Catholic monk Girolamo Savanarola, he came to rid Sacramento of suberbia and luxuria.
Brown was also ahead of his time. His early embrace of green politics--particularly energy conservation and renewable fuels--foreshadowed that of later Democrats, particularly Barack Obama. His strong outreach to Latinos and other minorities expanded his political base among California's fastest-growing populations.
Yet Brown understood that economic prosperity--not civil rights or environmental zealotry--was key to political ascendancy. Eastern journalists dismissed him as "Governor Moonbeam," but they ignored his Machiavellian skill in recognizing and reaching out to rising economic forces, notably the high-tech entrepreneurs in the Silicon Valley and across Southern California. The growth of this sector, along with rising trade with Asia and the military boom after the Soviet invasion of Afghanistan, set the pace for the state's strong rebound from its early 1970s doldrums.
But Brown's inquisitorial side surfaced again as he prepared a second run--he had made a charmingly eccentric assault in 1976--for the White House. Perhaps the prospect of facing a man of infinite flexibility, Bill Clinton, pushed him over the top, but Brown re-invented himself as a high-octane and, at times, shrill populist.
After some years in the political wilderness, he reemerged in 1998 as Mayor of Oakland, a tough job even in good times. Although he remained predictably arrogant and aloof, the job of managing a working-class city seemed to have brought him to his senses. Like the ideal politician in The Prince, Brown governed with something approaching strategic precision, pushing economic development, embracing the police and supporting new infrastructure spending.
Brown's newfound reputation as a canny realist helped him win the election as attorney general in 2006. Yet once back in statewide politics, the inquisitorial side found expression. Convinced about the impending threat of global warming, Brown used his new powers to push the Gorite agenda with the passion of a Torquemada.
Although Brown was not quite torturing heretics, he certainly applied the legal equivalent of thumbscrews to anyone--developers, cities, counties--who did not follow his prescriptions about "carbon neutrality." Even proposals for sensible, relatively dense "in fill" development were turned aside in favor of utopian, economically unsustainable ideas about forced density and transit friendliness.
Today, with California's economy is in tatters--its unemployment well over 12%--and Brown's crusade seems likely to make it worse. Onerous regulation threatens everything from the construction of new single-family homes to new employment tied to anything that releases demon carbon--including manufacturing, oil drilling and large-scale agriculture.
All this has made Brown widely feared in much of California's fractured, traumatized business community. Even worse, he has emerged as the standard-bearer of the public employee unions, the very force whose political power and pensions are bringing the state to the verge of economic ruin. The fact that Brown's campaign is funded largely by these unions makes it, at least on the surface, unlikely to challenge the hegemony of our putative "civil servants." They are said to be ready to spend up to $40 million on "independent" campaigns to help beat back any chance of a GOP victory.
This is worrisome given Brown's role in fostering the expansion of public-sector unions during his term, a group whose ascendancy has become arguably the single biggest factor in the state's precipitous decline during his last gubernatorial reign. As author Steven Greenhut has pointed out, unfunded pension liabilities in excess of $50 billion are one key element driving the state toward ever more depressed bond ratings and possible bankruptcy.
Under normal circumstances, Brown's ties to the public sector, his fickle nature and his dubious accomplishments would spell political doom. But amazingly, Brown's long, if mixed, record might actually prove an advantage against his most likely opponent, former eBay executive Meg Whitman, who is running as an outsider.
The problem for Whitman or any GOP candidate lies with the miserable legacy of another nominally Republican outsider, Arnold Schwarzenegger. The Terminator's record of ineptitude and empty blather stands as a mega-advertisement against inexperience. Compared to the former body builder's amateurish blundering, Brown's wealth of knowledge of government looks appealing.
Whitman, or her main challenger Insurance Commissioner Steve Poizner, also must struggle with a Republican Party out of sync with an increasingly multi-racial and socially liberal state. As long-time political analyst Allan Hoffenblum notes, for the first time there is not one congressional, state senate or assembly district with a GOP majority.
So in the end, California's fate may end up resting on which Jerry Brown emerges after the election. If he continues on his inquisitorial assault on carbon-creators, you can pretty much expect California's middle class to continue diminishing while the state's aspirational appeal ebbs ever further. The state could end up resembling Kevin Starr's description of his native San Francisco-- "a cross between Carmel and Calcutta."
But given his history, Brown could still surprise us. Stuck with responsibility for a decaying economy and fiscally burdened by the voracious public unions, Brown could do a "Nixon in China," imposing controls on pensions and salaries. He could recognize that "green jobs" can not save California from the abyss and that a new "era of limits" must apply to the public sector as well as the rest of us. With the passionate climate-change constituency shrinking, he might even decide to accept a modicum of carbon heresy as a necessary evil.
Brown should heed Machiavelli's advice for rulers to be "merciful and not cruel" and "proceed in a temperate manner with prudence and humanity." If in his old age Brown adopts the Italian writer's credo of tactical flexibility, reason and tolerance, the Golden State may yet revive itself, and with it restore the legacy of its most storied political family.
This article originally appeared at Forbes.com.
Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in Febuary, 2010.
Newspapers: The Search for A Killer Saviour
Sun, 03/07/2010 - 21:25The publishers and staffs of many daily newspapers would love to think of themselves as hip bloggers, tweeting to an eager and mobile public. But the reality is that newspapering came of age with railroads and steel mills, and the balance sheets of many companies are heavy with long-term debt, inflated valuations, unfunded pension liabilities, and the usual write-downs of smokestack America.
It does not take a degree from Harvard Business School or a partnership at McKinsey to explain why newspapers and many magazines are struggling: readers don’t want to pay for anything, and advertisers, as was said of Chicago Bears owner George Hallas, “throw nickels around like manhole covers.”
Newspaper companies cling to the illusion that Amazon’s Kindle reader or perhaps the Apple iPad will give the industry a killer technology that will allow readers to surf for news and the companies to collect money for providing it. But even charging four dollars a month to deliver an electronic file to subscribers probably does not cover the pension, salary, and real estate costs that are associated with old media. (The new headquarters of the New York Times has a birch forest in the lobby.)
Which brings us to one of the more absurd suggestions of the recent stimulus debate: the consideration that newspapers might themselves be in line for some bailout money, in the interests of maintaining a free press and a vibrant democracy. Maybe taxpayers could check a box indicating whether they want to save the Detroit Free Press, the city of Detroit, or just General Motors?
Everyone has their own theories on why newspapers are failing — internet pricing models, to postage rates, and the cost of paper — but mine center on the written content. Many daily papers have read for years like a variation on a collection of press releases.
Too often, articles are self-serving political messages out of Washington, or based on anonymous and biased sources. For readers, there's no recourse in the cases where the paper has got things wrong. Is it any wonder that they've migrated to vibrant, interactive Web sites?
For models of editorial salvation, newspapers should look to the formulas that allowed them to prosper in the first place, and serve as showcases for lively local coverage and debates, with writing that comes from correspondents in the true sense of the word: letter writers.
Many newspapers confine their opinion sections to two pages, and then fill up the rest of the paper with stale news which today's readers know by the time they stumble to the front porch. Add to that the celebrity-driven features (“Dateline Bradgelina” or "Tiger Hunting").
Most newspaper readers of my acquaintance have reversed their reading habits, and now start with the opinion columns and the letters-to-the-editor, and then glance over the news headlines. Why not fill a newspaper with what the readers look for and enjoy? Would it not be a pleasure to read twenty columnists, not simply three or four?
Needless to say, newspapers are run for their shareholders, and investors take more pleasure in full-page ads than in lively or argumentative columns. But in my mind, a newspapers run and financed by the readers, and not by corporate hierarchs, could succeed financially. If you are looking for a working model, think of a privately-funded university or even a mutual savings bank (one owned by its depositors).
Under these models, a newspaper would have revenue (more like tuition) from subscribers, its own capital (assuming any is left), advertising (but it would not be the lifeblood, as is the case now), and contributions (fund raising campaigns).
With whatever money is available annually to the editors, they would produce a newspaper that most closely matches the charter of the association or trust. It could report on local news, support Democrats or Republicans, devote itself to sports or foreign reporting, or cover the arts or fashion. That would be for the reader-members to decide.
In the current market, readers own few newspapers. Since 1936 a trust has owned the Guardian (London), which may explain its consistent editorial independence and the high quality of its writing. That said, the Guardian loses money annually, and the trust needs third-party assets to make up the losses.
Similarly, the ownership structure of The Economist, via several classes of its shares, insures that the magazine (technically it calls itself a newspaper) reports to a board of trustees, rather than to its shareholders, to insure editorial independence. In 2009, when the rest of the industry was looking for a handout, The Economist increased its worldwide circulation (by 6.4 %) to 1.4 million, its revenue (by 17 %), and its profits (by 26 %, to £56 million).
Nor could anyone accuse The Economist editors of dumbing down the product, given the publication’s relentless coverage of foreign affairs, finance, business, and economics. By comparison, the New York Post reportedly loses about $50 million a year for Rupert Murdoch. So much for pandering.
The problem for many large American newspapers—such as the New York Times—is that, while operating profits shrink, they are hoping to whistle past all sorts of electronic graveyards. In the last decade, for example, the Times squandered more than $2 billion to buyback its own overpriced shares rather than pay down debt or find a model that would sustain the paper in the age of what George W. Bush called “the Internets.”
Now it faces falling advertising, dropping circulation, higher paper and delivery costs, unfunded pension liabilities, and convertible debt and warrants due to a Mexican oligarch. Meanwhile, its competition is the ethereal and cost-free World Wide Web.
Regarding so called “pay walls” — the idea of charging Internet readers, lately embraced by the Times — columnist Michael Kinsley has written: “Every English-language paper published anywhere in the world is now in competition with every other. Competition is what has driven the price down to zero and kept it there.”
The same points are made in “The Curse of the Mogul” by Jonathan A. Knee, Bruce C. Greenwald, and Ava Seave, authors affiliated with Columbia University who make the point that “the Internet may be somebody’s friend — most notably, the consumers of media — but it is not the friend of incumbent media companies.” They believe that only those print franchises with a locally dominate position will make it, writing “...if print newspapers are to survive, it will be through single-minded focus on the only area of coverage in which they have an advantage.”
Their thesis on “what’s wrong with the world’s leading media companies” is that the dealmakers behind many companies made a string of terrible acquisitions that have wiped away $200 billion in shareholder value. (The Times contributed $1 billion to this figure, when it had to write down its investment in the Boston Globe.)
Will I miss the morning newspaper as we knew it? Not very much, I confess. I grew up in a world of monopoly-voice journalism, where getting a letter to the editor of the New York Times printed was not unlike receiving a papal indulgence.
As for regional or small town papers that only publish hints from Heloise or boosterism for local teams: have you ever spent a Saturday morning with the Bangor Daily News or the Kansas City Star? It strikes me that many American newspapers bailed out years ago.
Does anyone out there have a formula that will save the traditional daily? I didn’t think so. If you did, instead of reading this online, you would be in a closed-door conference with the publisher of the New York Times or the Baltimore Sun, explaining how web-site hits or those Pulitzer Prizes from 1987 can be transmuted into gold.
Matthew Stevenson is author of the recently published Remembering the Twentieth Century Limited. He lives in Europe.
The Forty-Fifth Parallel
Sun, 03/07/2010 - 00:15When I was a kid growing up in Oregon, we'd occasionally drive north on I-5 to Portland. Just north of Salem we'd pass a sign that read (if memory serves) "The 45th Parallel: Halfway between the equator and the north pole."
I wish I'd stopped and taken a picture of myself straddling the parallel. It would go with a collection of similar straddles: across the equator in Uganda, across the Arctic Circle in Finland, and across the 42nd parallel.
Yes, for if you go south on I-5 (or almost any other road) the 42nd parallel, 7/15ths of the way from the equator to the north pole, is very well marked. It says "Welcome to California." For 42 is the southern boundary of Oregon and Idaho, against California, Nevada and Utah. Likewise, heading south from Syracuse on I-81, just past Binghamton, it's marked as "Welcome to Pennsylvania.”
Other latitudes form important state lines: the four corners is at the 37th parallel and the 109th meridian. Colorado's northern boundary follows the 41st parallel. And famously, the 49th parallel comprises the largest part of the US-Canada border.
The special 45th parallel, however, is explicitly reflected in political geography in only two places: it forms Montana's southern boundary with Wyoming. And more significantly, it forms the northern boundary of New York and Vermont against Quebec.
Only four states lie entirely north of the 45th parallel: Alaska, Washington, Montana (almost), and North Dakota. The biggest cities are Seattle and Portland. The parallel divides the Minneapolis-St. Paul area. So counting six million from Washington, 2 million each from Oregon and Minnesota, and about 3 million from everywhere else, approximately 13 million Americans live north of the 45th parallel – or 4% of our population.
Now consider Canada. That country's southernmost reach is Middle Island in Lake Erie, just south of the 42nd parallel. (My mother often told me that Canada was south of California.) The 45th parallel passes north of Barrie, Ontario, which means the Toronto Metro area and Western Ontario are to the south. Further east, St. John, NB lies just to the north, but Halifax, NS is just to the south. Montreal, Ottawa, and all western cities are north of 45. I'll guess that about 25 million of Canada's 34 million people live north of the 45th - about 74% of the population.
So while almost all Americans live to the south, a large majority of Canadians live to the north. So if one wants to distinguish the US from Canada by a single straight line, the 45th is as good as any. It is much better than the iconic 49th, since the largest Canadian cities are well south of that latitude.
Heading east, the 45th passes through the southern tip of Crimea, and splits Kazakhstan and Mongolia in half. The only parts of Russia lying south are Vladivostok and the northern Caucasus. Japan, China and the Central Asian republics are almost all to the south.
In Europe, the parallel runs through Southern France and Northern Italy. To a very rough approximation, it follows the Pyrenees-Alps mountains. In the continental EU, only Bulgaria, Greece, Spain and Portugal lie entirely to the south.
The parallel wouldn't have been the worst way to split up the former Yugoslavia: Zagreb is to the north, and Belgrade in the south. Further, the Serbian region of Vojvodina and the Romanian region of Transylvania are north. These areas both have large Hungarian minorities, formerly part of the Austro-Hungarian empire. Irredentist movements in Hungary might happily settle for a boundary at the 45.
A reasonable population estimate for north of the 45th counts 200 million in the former USSR, 370 million in Europe, and 30 million in Canada, for a total of 600 million, or 10% of the world's population.
If the earth were a perfect sphere, then 29.3% of the surface area of the northern hemisphere would lie north of the parallel (this is a reasonably straightforward calculus problem; try it if you're so inclined). As the earth is actually an ellipsoid, the number is somewhat smaller. Since about 5 billion people live in the Northern Hemisphere, only about 12% of them live north of 45. (Only about one million people live south of 45 S.)
Is this surprising? Not really – one wouldn't expect many people to be living at the north pole. But come to think of it, you'll be surprised by how surprising this number really is.
A reasonable rule of thumb is that cities at the same latitude will have the same average annual temperature, as they get the same amount of sunshine at the same times. Thus while Minneapolis certainly has colder winters and hotter summers than Portland, on average it should come out right. I learned this again on my last visit to Portland – summer nights in Portland are cold!
But the rule of thumb doesn't apply when something truly bizarre affects the climate. And that bizarre thing is the Gulf Stream, which heats Europe 5+ degrees latitude more than it should. Thus Milan (at 45) has a San Francisco climate; London, Paris and Berlin feel like Portland; Oslo, Helsinki and St. Petersburg are similar to Vancouver; and even Murmansk can't be worse off than Anchorage.
Thus the surprise is not how few people live north of 45, but rather how many. For of the 600 million northerly souls, only 5% of them live in North America. That means that subarctic Eurasia has nearly 20 times the population, but probably only 3 times the land area. Thus there is a seven-fold higher population density in northern Eurasia than there is in North America. I'm surprised.
To quantify the surprise, the appropriate Gulf Stream comparison line through Europe might be at the 52nd parallel rather than 45. I chose that latitude as it roughly corresponds to the Baltic coast. Thus France, Germany, Benelux, Ukraine, Poland, and major parts of European Russia lie between 45 and 52, along with smaller countries. Estimating that combined population at about 400 million, and subtracting that from the 600 million, we get a more reasonable sub-arctic population estimate of about 200 million.
So 200 million live in the northerly Eastern hemisphere, and 35 million live in Canada – a ratio of nearly six to one. I'm still surprised, but can no longer account for the discrepancy. Is life really that much easier in Finland?
There is another half-way latitude worth mentioning. What latitude splits the earth's surface in half? If you did the above calculus assignment, you will immediately know the answer: the 30th parallel. Half the earth's surface lies within 30 degrees of the equator, and half beyond. The 30th parallel does not correspond to any political geography - it goes through Jacksonville, Baton Rouge, Beaumont, and Austin, before entering Mexico southeast of El Paso.
So the United States mostly lies between the 30th and 45th parallels. Now isn't that just the very best of temperate climes?
Daniel Jelski is Dean of Science & Engineering State University of New York at New Paltz.
The Failed State of California - The Changing Landscape of America
Fri, 03/05/2010 - 22:29The Golden State is not so golden anymore. California is broke. With a $20 billion dollar deficit and tax revenues down 27% from last year, Governor Schwarzenegger looks to Washington D.C. for a bail-out to rescue the state from financial ruin. Like the executive passing a beggar on a street corner, Washington looks the other way. Unemployment is statistically 12.3%, but functionally, it runs closer to 20% of the work force. Nowhere is unemployment more tragic than in the Central Valley, the fruit and vegetable producer of the world. The unemployment rate in arguably the most fertile land on the planet is near 30% as residents line up in bread lines to feed their families. How did this happen? What happened to the Golden State?
California is a victim of its own success.
For decades following WWII, people flooded into the golden state in search of weather, opportunity and the good life. California delivered. Under Governor Pat Brown in the 1960s, California had wonderful weather, plentiful water, new highways, and the best public school systems in America. Every student had access to a strong community college system and top students were guaranteed admission to the University of California. Agriculture, Hollywood, aerospace and construction provided more jobs than workers.
The 1970s brought harbingers of California’s future. The environmental movement muzzled a robust real estate industry with alphabet agencies like AQMD, CEQA, EIR and CCC. Building moratoriums raised home prices along the coast. Aggressive land use controls pushed development inland creating urban sprawl and long commutes as residents sought affordable housing inland. Governor Jerry Brown quipped, “If we do not build it, they will not come” and shut down highway construction, public school construction and added layers of new regulations. The people came anyway.
The collapse of the Soviet Union in 1989 dealt California a cruel blow. The peace dividend meant the end for many high paying aerospace jobs and defense contracts. The recession that followed was felt far deeper than in the rest of the country. California climbed out of its recession led by wave after wave of new millionaire software developers during the dot com revolution.
In 2001, the dot come bubble burst. The politicians in Sacramento, emboldened by an endless supply of money from the dotcommers to state coffers, spent over $100 billion while revenues fell to just $70 billion. They ran up a $38.2 billion deficit in 2002 under Governor Gray Davis – more than the other 49 states combined. The people recalled Davis in 2003 and replaced him with the Terminator, Arnold Schwarzenegger.
The politicians learned nothing.
California survived the bursting dot com bubble with yet another round of real estate escalation (the housing bubble) that lifted home prices by 20% per year. Spending escalated in line with home prices. More regulations were added to burden industry. Taxes were raised. Tuition increased. California added “The Global Warming Solutions Act of 2006” as if California alone could stem global warming. In response to 9-11, politicians passed SB 400, a feel good law that allowed cops and fireman to retire at 50. It was budgeted to cost “just $400 million” per year. Last year it cost $3 billion. Then, they passed SB183 the next year, applying the same benefits to non-safety state employees like billboard inspectors. When the housing bubble burst in 2007, California found itself with a $20 billion deficit – again.
This time, California will not climb out so easily. Federal regulators, implementing the Endangered Species Act that was invented in California, diverted water from the farms of the Imperial Valley to the ocean to protect the engendered Delta Smelt. This tiny fish, with no commercial value, threatens the well being of tens of thousands of agricultural workers and contributes to unemployment figures worse than the Great Depression. California’s schools now rank 49th in the nation. They no longer generate the brilliant minds that fueled past economies. California’s 11.6% income tax has forced many high income earners to no income tax states like Florida or Nevada. The housing industry that created 212,960 units in 2006 was only able to build 36,000 units in 2009.
Former state librarian and California historian Kevin Starr talks about the potential of California being the nation’s first failed state. John Moorlach, Orange County Supervisor says, “We better start talking about this. What are we going to do when the entity (state government) above us crumbles? I think we are already technically bankrupt.” He should know: Orange County went bankrupt in 1994. The City of Vallejo, population 120,000, was forced into bankruptcy in 2008 by commitments by its politicians to pay its City Manager $400,000 per year and its fireman an average of $175,000 annually.
The biggest obstacle facing California’s recovery is a dysfunctional pension system created by politicians indebted to the public employee unions. The pension obligation is now $17 billion per year. California has 260,000 state employees and 38,000 are paid more than $100,000 per year. The University of California employs another 250,000 and 19,000 are paid over 100,000 annually. These generous salaries have been converted into lifetime annuities. The Legislative Analyst’s Office estimates the unfunded pension obligations of California to total $237 billion. In an era of retiring baby-boomers, this trajectory is clearly unsustainable. With tax receipts down, huge pension obligations and a state budget deficit of $20 billion, the vast majority of municipalities in California are suffering deficits and facing the prospect of Chapter 9 municipal bankruptcy.
A train wreck is coming.
Schwarzenegger, once the Terminator but now a Termed-Out lame duck, told the Sacramento Press Club, “No single issue threatens the fiscal health of this state more than our exploding pension obligations. Over the last 10 years, our pension costs have gone up by 2,000 percent from $150 million per year to $3 billion a year (for state government workers). That means hundreds of billions in unfunded liabilities and it means the $3 billion we are spending now will go up to $10 or $12 billion.”
In October, state Treasurer Bill Locker told lawmakers they needed to reform the pension system or “it will bankrupt the state.” The California Public Employees’ Pension System chief actuary has described the current pension system as “unsustainable.” Adam B. Summers, a policy analyst at the Reason Foundation and author of “California Spending By The Numbers: A Historic Look At State Spending From Gov. Pete Wilson to Gov. Arnold Schwarzenegger” warns, “I think we are starting to approach a tipping point.”
Do the politicians in Sacramento want to do something about the train wreck that is coming? The answer as of now is clearly no. There is no evidence that they are willing to curtail spending and reform the pension laws that cover 500,000 state employees. They know the State of California cannot go bankrupt under existing laws. However, if they will not act, the people may act for them. Just as they did in 2003 with the recall of Gray Davis, the people are taking the initiative. They are sponsoring the Citizens Power Initiative to curtail the ability of unions to use payroll deductions for campaign purposes. Another initiative would make California’s full-time legislature part-time. In the meantime, the California economy continues to grind to a halt. Will the people of California shock the nation like the people of Massachusetts did with the election of Scott Brown? Or will the unions buy another election and drive the Golden State over the edge, making it the First Failed State?
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During the first ten days of October 2008, the Dow Jones dropped 2,399.47 points, losing 22.11% of its value and trillions of investor equity. The Federal Government pushed a $700 billion bail-out through Congress to rescue the beleaguered financial institutions. The collapse of the financial system in the fall of 2008 was likened to an earthquake. In reality, what happened was more like a shift of tectonic plates.
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This is the eighth in a series on The Changing Landscape of America written exclusively for New Geography
Robert J. Cristiano PhD is a successful real estate developer and the Real Estate Professional in Residence at Chapman University in Orange, CA.
PART ONE – THE AUTOMOBILE INDUSTRY (May 2009)
PART TWO – THE HOME BUILDING INDUSTRY (June 2009)
PART THREE – THE ENERGY INDUSTRY (July 2009)
PART FOUR – THE ROLLER COASTER RECESSION (September 2009)
PART FIVE – THE STATE OF COMMERCIAL REAL ESTATE (October 2009)
PART SIX – WHEN GRANNY COMES MARCHING HOME – MULTI-GENERATIONAL HOUSING (November 2009)
PART SEVEN – THE FATE OF DETROIT: GREEN SHOOTS? (February 2010)
Biotech Research No Silver Bullet for Florida
Thu, 03/04/2010 - 21:26By Richard Reep
Until recently, Florida was the king of growth, agriculture, and tourism. Growth – at 900 immigrants a day from other states – characterized Florida’s landscape for over 30 years, and growing cities were in perennial battle with agriculture up until the watershed year of 2009. As a tourist destination, Florida claimed world-class status, which once served the state just fine. Now, gasping for breath and facing financial uncertainty, Florida’s leadership frantically seeks a new silver bullet to create jobs, focusing on biomedical research. This focus is timely and important, and can truly move the state in a new direction, and the state leadership’s resolve to diversify the economy should stay strong, even with a short-term lack of results.
Thanks to the Florida State Legislature’s 2006 Florida Capital Formation Act, It is now home to new facilities for Torrey Pines, Scripps, Max Planck, Nemours, the Miami Institute for Human Genomics, SRI International, the Vaccine & Gene Therapy Institute, and Charles Stark Draper Laboratory, Inc. However, the Millennial Depression has slowed growth and delayed the much-needed spinoffs that the state was counting on for job creation. Now, with the state’s coffers empty, the lack of instant job growth is causing a search for another, new instant success instead.
Seven world-class life science research institutes in three years actually constitutes a remarkable achievement. Two are already off the ground and operational: Max Planck Institute and Torrey Pines. As they enter the operational phase, the laboratories are discovering that there is tough competition to attract top research scientists to Florida, with its noted lack of cultural amenities and its reputation for being, well, not exactly a progressive state in terms of education, culture, or environmental values.
In January, however, the state legislature’s own analysis office recommended dropping life sciences research investment, because the return on this investment is measured in years. The politically correct unit of measurement today is apparently months or even minutes. In a published report, this office complained that its investment – all of three years old – had “not yet resulted in the growth of technology clusters”. It then recommended that Florida shift focus from research institutes to attracting biotech manufacturing companies, perhaps shortening the payback cycle.
Only in our current times is failure defined as the lack of instant success. The report cites a lack of private venture capital as the reason for failure in Florida, yet digs no further into the reasons why Florida is low on the list of venture capital firms. This, along with government and large non-profit investment, is historically the only true source of funding for pure research, and is usually tightly tied to the region in which the research is to occur.
As Thomas Edison’s winter home, Florida has always had a reputation among scientists and inventors as a vacation spot, rather than a real research venue. Venture capitalists prefer to cluster their investments around known quantities, and like most other investors, associate the unknown with high risk. By 2002, the Progressive Policy Institute ranked Florida 49th in employment of scientists and engineers, hardly news in a state dominated by service workers, construction laborers and immigrant farm labor.
Unfortunately, scientists and their families tend to like the things that Florida is not good at: sensitivity towards the natural environment, excellent, competitive schools and universities, highly trained workforces and public philanthropy for arts and cultural activities. When it comes to private research grants, scientists tend to find their homes in places like San Diego, Boston, Berlin, and London. Beaches and theme parks just don’t appear on their radar screens.
Thus, the state’s massive injection of capital has yet to produce any spin-off laboratories or manufacturing facilities around these new facilities. Private venture capital is simply shy to develop add-ons, knowing it will be a real hard sell to the main class of research scientists so desperately needed. And this fact, in these tough times, is what calls into question the whole investment strategy. On the surface, the state’s ambition to become king of research appears to be ludicrous.
Yet, this lunacy may have method in it: Florida has many factors that do, in fact, favor life science research. It does have specific, although lightly funded, university research in biotech and medical study already in place. The state also has a gerontological population that provides a natural study base for much of the growing research in aging.
Also, the scientific community is as diverse in its leisure and cultural choices as anybody, and Florida’s mild climate and recreational activities have already contributed to the attraction of new researchers. Unlike other, more established clusters in places like Boston and San Diego, Florida is also highly affordable, an important factor given the compensation levels to which many science professionals are accustomed. This is one reason Southern California gained an early foothold in aviation and science research and has maintained the lead in these areas.
And lastly, sometimes it’s good to be the new kid on the block, for the competitive politics within other clusters has yet to develop in Florida. Even Florida’s former governor Jeb Bush expressed surprise at how “the state’s universities have played so well together” to gain its early foothold in science research. Florida has shown great energy and creativity in attracting these new research venues, and can continue to outperform the established, stable locations if it keeps its eye on the long-term goal and uses its natural advantages to sell the state to the scientific community worldwide.
The strategic payoff is a more stable, educated state population that can ride out the boom/bust employment cycle better. This payoff, however, can only come if Florida’s leadership quits seeking a magic “silver bullet” to fix things in the next fifteen minutes, and does the hard work to attract and retain venture capital, invest in its educational system, and keep its collective eye on a long-term goal to become competitive in more than just a cheap place to live and vacation. Florida’s business and political leadership made some good choices to create a state-funded venture capital arm in 2006, and should stick to their commitments. If they pay their dues, eventually they may just find themselves a new crown to wear.
Richard Reep is an Architect and artist living in Winter Park, Florida. His practice has centered around hospitality-driven mixed use, and has contributed in various capacities to urban mixed-use projects, both nationally and internationally, for the last 25 years.
Photo: alternatePhotography
New Traffic Scorecard Reinforces Density-Traffic Congestion Nexus
Wed, 03/03/2010 - 20:37Inrix, an industry provider of traffic information, has just published its third annual Traffic Scorecard, which ranks the nation’s 100 largest metropolitan areas based upon the intensity of their peak hour traffic congestion in 2009. The results provide further evidence of the association between higher urban population densities and more intense traffic congestion.
Los Angeles, Again: Not surprisingly, Los Angeles is again the most congested metropolitan area over 1,000,000 population. In Los Angeles, roadway travel takes nearly 34.7% more in peak periods than when there is no congestion. This means that a trip that would take 30 minutes without congestion would take, on average 40.5 minutes during peak periods.
The principal measure used by Inrix is the Travel Time Index, which was developed by the Texas Transportation Institute (TTI), for its congestion reports that started in 1982. TTI’s latest Urban Mobility Report is for 2007. The Inrix measures are developed from actual GPS vehicle readings. This information is also provided to TTI to assist in preparation of its annual Urban Mobility Report.
Measuring Delay: In the new edition, Inrix switches from using the Travel Time Index to what it calls the Travel Time Tax. The difference between the two measures is that the Travel Time Tax measures the percentage of delay, such as 35% in Los Angeles, while the Travel Time Index would state the figure as 1.35. The new method is preferable because differences in traffic congestion are more readily apparent. . For example, a metropolitan area having a Travel Time Tax of 15% would have 50% worse traffic congestion than a metropolitan area having a Travel Time Tax of 10%. This large difference is not as obvious when comparing the Travel Time Index values of 1.15 and 1.10. The “Travel Time Tax” parlance, however, is less than optimal and this article will use “average congestion delay” instead.
Ranking the Metropolitan Areas: The average congestion delay in Los Angeles was much worse than in the other largest metropolitan areas, just as its core urban area density is well above that of anywhere else in the US, including New York (where far less dense suburbs more than negate the density advantage in the core city). It also doesn’t help that a number of planned freeways were cancelled in Los Angeles over the last 50 years.
Among the large metropolitan areas, Washington, DC had the second worst Average congestion delay, at 22.4%, followed by San Francisco, at 21.5%, Austin at 20.7% and New York at 19.7%. Austin may seem to have placed surprisingly high, however this was the nation’s last large metropolitan area to open a full freeway to freeway interchange and has only recently begun to develop a comprehensive freeway system, through the addition of toll roads. Austin’s late roadway development is the result of two factors. Austin was too small in 1956 to receive a beltway under the interstate highway system and an anti-freeway movement delayed construction for decades.
Inrix also develops an average congestion delay for the worst commuting hour. Los Angeles also has the most congested worst hour, with an average congestion delay of 69%. Austin ranked second worst at 55%, while San Francisco was third at 46%, Washington, DC fourth at 45% and New York fifth at 44%.
Honolulu: Almost as Bad as Los Angeles: Smaller metropolitan areas also exhibited intense traffic congestion. Honolulu had an average congestion delay nearly as bad as Los Angeles, at 32.4% and a worst hour average congestion delay of 64%. The core urban area of Honolulu has the highest density of any metropolitan area between 500,000 and 1,000,000 population. New York exurb Bridgeport-Stamford had a worst hour average congestion delay of 63%, with a peak period average congestion delay of 18.0%.
Inrix: Density and Traffic Congestion: Virtually all of the congestion and most of the analyzed road mileage is in the urban areas, rather than in the rural areas that make up the balance of the metropolitan areas. The metropolitan areas with more dense urban areas tend to have worse traffic congestion, as the table below indicates.
• Metropolitan areas with core urban densities (see Note 1) of more than 4,000 per square mile had peak period average congestion delays of 18.4%, which is more than three times that of metropolitan areas with core urban densities of less than 2,000 (5.9%).
• Metropolitan areas with core urban densities of more than 4,000 per square mile had worst peak hour average congestion delays of 37.5%, which is nearly 2.4 times that of metropolitan areas with core urban densities of less than 2,000 (15.9%).
These relationships are similar to those indicated in the Texas Transportation Institute data for 2007.
Traffic Congestion & Urban Density in the United States: 2009 Core Urban Area Density (2000) Peak Period Average Congestion Delay: 2009 Compared to Least Dense Category Worst Hour Average Congestion Delay: 2009 Compared to Least Dense Category Over 4,000 18.4% 3.26 37.5% 2.36 3,000-3,999 10.0% 1.76 22.3% 1.41 2,000-2,999 7.3% 1.30 17.7% 1.12 Under 2,000 5.6% 1.00 15.9% 1.00 Density: Population per square mile Travel Time Tax: Additional travel time required due to traffic congestion 2000 population density is the latest reliable data Calculated from INRIX & 2000 Census data
Sierra Club Data Also Shows Nexus: Moreover, the association between higher densities and greater traffic congestion is indicated by the ICLEI-Local Governments for Sustainability Density-VMT Calculator, which is based upon Sierra Club research. According to the Calculator, under the “smart growth” scenario, residential housing would be 15 units per acre, as opposed to its “business as usual” scenario at a typical density of four housing units per acre. The density of traffic (vehicle miles per square mile) under the higher density “smart growth” strategy would be 2.5 times as high as under the “business as usual” scenario (Figure).
The Inevitable Comparisons: Invariably, analysts (smart growth advocates and me) like to point out relationships between Portland, with its “smart growth” policies and Atlanta, the least dense major urban area in the world. The Inrix data shows Portland to have an average peak hour delay of 12.2%, which is 15% worse than Atlanta (10.6%). Portland is nearly twice as dense as Atlanta, while Atlanta’s traffic congestion is made worse by one of the most decrepit freeway and arterial systems in the nation.
A National Vision: Inrix has also developed a monthly national congestion delay factor. Inrix notes that traffic congestion had been improving as driving declined due to the Great Recession. However, Inrix refers to reduction in driving as “lucky,” and notes that without a “national vision” that “includes addressing congestion as a national priority,” greater traffic congestion will result.
There is indeed good reason to address traffic congestion. As David Hartgen and M. David Fields have shown, there is a strong relationship between the higher levels of mobility that occur with less congestion and greater economic growth. Obviously that relationship extends to higher urban densities, which are associated with economically counter-productive levels of traffic congestion.
But there is more than jobs and the economy. More intense traffic congestion produces more intense air pollution as well as more greenhouse gas emissions. It is well to remember that public health was the rationale for air pollution regulation. Air pollution’s negative impacts are so local that they are measured in the quality of life of individual people, especially those in close proximity to unnecessarily overcrowded roads. It is ironic that the higher density promoted by smart growth advocates exposes urban residents to more intense air pollution.
Note 1: 2000 core urban area (urbanized area) population densities are used in this analysis because there is no later reliable information. The next reliable urban area density data will be a product of the 2010 census. The Federal Highway Administration (FHWA) produces later urban area density figures, many of which are substantially inconsistent with those of the United States Bureau of the Census, which is the primary source of such information. For example, as late as 2005, FHWA reported the Houston urban area to have 1.3 million fewer people than the Bureau of the Census, while reporting a land area nearly 250 square miles larger than the census had measured. Of course, this is a physical impossibility. The result was that Houston’s density was overstated by 45%.
Note 2: Inrix also ranks metropolitan areas using an “overall congestion” measure, which is simply all congestion added up. As a result, the overall congestion measure is heavily weighted by population. This is illustrated by comparing Los Angeles and Honolulu. These metropolitan areas have very similar average congestion delays, as noted above. This means that drivers encounter similar traffic delays during peak in Los Angeles and Honolulu. However, Honolulu’s overall congestion measure is 95% less than that of Los Angeles, principally driven by the fact that Honolulu’s population is 93% less. As such, the overall congestion measure is of little relevance to people in their day to day commute or as a comparative measure of the intensity of congestion between areas.
Photograph: Los Angeles City Hall.
Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”
Suburban Design: Square Peg In A Round Hole
Tue, 03/02/2010 - 20:55Remember that Fisher Price toy – “Baby's First Blocks”? It was supposed to teach us one of life's first lessons: Place a square shape in a square hole, and a round shape in a round hole. We're supposed to understand this idea before we learn to say our first words, or to walk. Yet in the development of our neighborhoods, we have put that square shape into every hole, no matter what the shape of that hole.
In past centuries land was primarily developed with one pattern – the grid — because it was simple to calculate the geometry and stake out in the field. No matter what you have read about the “town square” and the advantages of the “grid pattern”, the reason for the grid was simply that it sidestepped the painstaking task of manually calculating the land development plat when curves were involved. Forested areas were routinely clear-cut, and swamps (today’s wetlands) were filled in. Those were the days during which development was straight-forward and simple: develop land while destroying what nature provided on the soil. Natural topography, which is certainly not based upon the grid, was bulldozed into oblivion.
In the 1960’s, newer forms of site design became commonplace, primarily in the exploding suburban landscape that rose after urban-core riots fueled what was then known as “White Flight”. This newer form of design introduced more curved patterns. Unlike the grid, the occasional curve broke up the monotony, and submitted site plans began to look more interesting. These new patterns were the start of a desire to follow the natural shape of the terrain.
But in the 1960s we did not have an awareness of the environmental damage of development that we posses today. As automation in computations, drafting, and land surveying technology began to reduce the workload of non-gridded designs, the curved pattern became more commonplace. This transition is easily seen by visiting any city's land records and looking at the changes in land development patterns of recorded plats since World War II.
For decades, the curved patterns were designed by individuals who concentrated on density goals by squeezing every hundredth of a foot allowed by ordinance. Curved streets conform to the random contours of nature much better than the grid, and the curved pattern, if correctly designed, can be extremely efficient while delivering connectivity for vehicles and pedestrians. That is, if the land planner knows how to design these systems. But patterns that would harness any delivered vehicular and pedestrian connectivity were not part of the plan. Without concentrating on harnessing the curved patterns to create functional traffic systems, so-called “land planners” — and anyone can still become a land planner simply by adding the term 'land planning' to their business card — provided plenty of ammunition to the New Urbanism movement's attacks on curved design.
In any case, with the use of curved patterns land development broke away from sole use of the monolithic square shape, and introduced two new primary shapes: An inner pie shaped lot and an outer pie shaped lot. For more than a half century, these three basic shapes have defined the majority of the growth pattern for American development.
These three basic shapes have been the foundation on which we have built millions upon millions of new homes. We have been placing that square shaped home in the triangular hole as if one of the first lessons we were taught was meaningless. Those toy blocks were supposed to teach us to take advantage of the shapes in life that we are offered. Apparently the architectural community, as well as the building industry, ignored this opportunity, until now.
Home builders large and small have used the same basic shape, as if all lots were only rectangular. Even homes that have garage snouts and are often anything but rectangular in shape are set by civil engineers with a house “pad” that is based on the square. I’m pretty sure most of these engineers were brought up with the Baby's First Blocks, or something similar. Forcing a square shape into a triangle shape results in a bigger triangle than need be, or making the square much smaller than necessary. In other words, we have built a quite inefficient world for over half a century.
In an effort to create a more sustainable world, we are developing new methods to design neighborhoods. Part of the effort to eliminate the tremendous waste in land development has been to reassess architecture as part of the overall function of the neighborhood. This became much more critical as we developed Performance Planning System, which was created to teach sustainable development design methods. It quickly became apparent that there was a tremendous void in the opportunities to incorporate new forms of architecture, especially in developments with curved patterns.
The square home that fits on the square lot does not offer much real opportunity for change. But the other two basic shapes invite new efficiency and value to the home buyer, critical in this down housing market. Homes that are shaped to fit on the inside of the curve can be wider in the front...much wider. This results in a home that does not have to be as deep, essentially making the rear area useable as well because of extra rear yard depth, while providing the same useable square footage. The extra width makes the garage less prominent, and creates much more viewable area from within the home that looks out on the larger rear yard and the streetscape. The home that's wider in the front allows a bigger porch area and greater opportunity to tie living areas to the street. Less of the side of the home is exposed, and the streetscape becomes more attractive, enhancing that all-important curb appeal.
The outer side of a curved shape is the opposite pie shape. In this case we can create a stronger tie to the larger rear yard (the outer curves have larger rear yards than a rectangular lot). Like the inner pie, there is more width opportunity to create a home that maintains a target square footage, yet is less deep, again creating an ever larger useable rear yard.
Perhaps even more important is that we can use these new patterns either to make larger homes, to create larger, more useable yards, or to create non-rectangular pad shapes that adhere to the letter of the law (ordinance regulations) while gaining density and reducing neighborhood sprawl. Actually we can easily accomplish all three!
So what do the home builders think? In this down economy there is little opportunity to for trends to develop, but in almost all cases where we have promoted this idea builders have embraced it. These developers have included one of the largest home builders in North America, and one of the most respected in Texas.
The amount of waste we can eliminate by using the lessons that were supposed to be taught with our First Blocks is enormous. And it comes just in time to give builders that extra edge in today's tough market.
Rick Harrison is President of Rick Harrison Site Design Studio and Neighborhood Innovations, LLC. He is author of Prefurbia: Reinventing The Suburbs From Disdainable To Sustainable and creator of Performance Planning System. His websites are rhsdplanning.com and performanceplanningsystem.com.
Decentralize The Government
Mon, 03/01/2010 - 21:28From health care reform and transportation to education to the environment, the Obama administration has--from the beginning--sought to expand the power of the central state. The president's newest initiative to wrest environment, wage and benefit concessions from private companies is the latest example. But this trend of centralizing power to the federal government puts the political future of the ruling party--as well as the very nature of our federal system--in jeopardy.
Of course, certain times do call for increased federal activity--legitimate threats to national security or economic emergencies, such as the Great Depression or the recent financial crisis, for example.
Other functions essential to interstate commerce--basic research, science education, the guarantee of civil rights, transportation infrastructure, as well as basic environmental health and safety standards--also call for federal oversight. Virtually every modern president, from Roosevelt and Eisenhower to Reagan and Clinton, has endorsed these uses of centralized government.
But what is happening now goes well beyond the previously defined perimeters of the federal government's powers. Obama seems to possess a desire not so much to fix the basic infrastructure of the country but to re-engineer our entire society into the model championed by liberal academia.
There also seems to be a conscious design to recreate the country as a European-style super-state. Forged by an understandable urge to minimize chaos after a century of conflict, the super-state generally favors risk management through centralization of authority. This has traditionally been accomplished by ceding regulatory powers to national capitals, though lately more and more powers have been ceded to the European Union.
Initially the administration had hopes of imposing similar controls through acts of Congress. However, with the shifting political mood, this seems less and less possible. With its latest action the administration sends the message that it will now impose the desired results through the bureaucracy. Under the proposal, private firms that do not raise wages will be bullied into doing so through the manipulation of federal contract awards.
This marks a departure from our basic traditions. For most of our history the burden of expanding opportunity has rested with the private economy, albeit in conjunction with often necessary protections for workers and consumers. Now the overall control of the economy is shifting to Washington--from government contracts to ownership shares in companies like General Motors and much of the financial sector.
This new order would transform the very nature of American capitalism. Now the economic winners will not be those working for the most agile or profitable companies, but those who gain the blessings of the federal overlords. In some senses this extends the corrupt, largely failed political economy of Chicago politics to a bastard American form of French dirigisme.
Climate change provides another critical and necessary rationale for the expansive federal role. With the "cap and trade" system all but dead, the administration now wants to regulate energy and land use through the gentle graces of a largely unaccountable EPA apparat. As a result, we may see energy use, land use and transportation--as is increasingly the case in California--controlled by the whims of the unelected bureaucracy.
Such command and control approaches have their advantages in making people do what the mandarins demand. This is one reason there are so many admirers of Chinese autocracy now. In that regime, unlike our messy democracy, you can be forced to be green in precisely the way they tell you. There are always firing squads for those who go off the program.
Of course, even the most passionate centralists don't advocate adopting the Chinese model. But the notion of an enlightened super-state has long appealed to those disgusted with American-style muddling through. In some ways, the current fashion recalls Americans' attraction for the Soviet Union or even fascist Italy during the troubled 1930s.
Fortunately, most Americans do not appear ready for unbounded autocracy. This is particularly true outside the coastal urban centers. The Tea Party may have some cranky--even ill-advised--ideas, but they reflect a genuine--and broader--American preference for solving problems at the state or local level.
Indeed, Americans, including some on the left, are instinctive decentralists. We express this tendency physically, first in our decades-old movement to the suburbs, and increasingly to smaller towns and cities as well as rural areas. Even in cities like New York or Los Angeles, local neighborhood identity trumps ties to more grandiose visions of City Halls or regional bodies. The rise of the Internet and social networks has enhanced this decentralizing trend by providing instant linkages and helping ad hoc organization among neighbors.
Economic evolution mirrors this trend. Over the past few decades U.S. employment has shifted not to mega corporations but to smaller units and individuals; between 1980 and 2000 the number of self-employed individuals expanded 10-fold to include 16% of the workforce. The smallest businesses--the so-called micro enterprises--have enjoyed the fastest rate of growth, far more than any other business category. By 2006 there were some 20 million such businesses, one for every six private sector workers.
America's entrepreneurial urge, in contrast to developments elsewhere, has actually strengthened. In 2008 28% of Americans said they had considered starting a business--more than twice the rate for French or Germans. Self-employment, particularly among younger workers, has been growing at twice the rate of the mid-1990s.
The remarkable volatility within even the largest companies has exacerbated this trend. Firms enter and leave the Fortune 500 with increasing speed. More and more workers will live in an economic environment like that of Hollywood or Silicon Valley, with constant job shifts, changes in alliances between companies and the growth of job-hopping "gypsies." Although hard times could slow new business formation, historically recessions have served as incubators of innovation and entrepreneurship.
Much of the most dynamic and meaningful change takes place under the radar of both big business and government. The shift to greater localism can be seen in the growth of local, unaffiliated community churches, regional festivals and farmers markets. Bowling clubs and old men's clubs may be fading, but volunteerism has spiked among millennials and seems likely to surge among baby boomers. In 2008 some 61 million Americans volunteered, representing over a quarter of the population over 16.
No other major country exhibits this kind of localized, undirected activism. Such vital grassroots may become even more important as the country becomes more diverse. In the coming decades we will have to accommodate an expanding range of locally preferred lifestyles, environments, ethnic populations and politics. One size determined by mandarins in Washington increasingly will not fit all. South Dakotans and San Franciscans will prefer to address similar problems in different ways. Within the limits of constitutional rights, we should let them try their hand and let everyone else learn from their success (or failure).
Ultimately, we do not want to recreate the expansive mandarin state so evident in many foreign countries. Instead, we should focus more on family, community, neighborhoods, local jurisdictions and voluntary associations--what Thomas Jefferson called our "little republics"--as the most effective engines driving toward a better future.
This article originally appeared at Forbes.com.
Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in Febuary, 2010.
Why Millennials are Economic Liberals and What to Do About It
Sun, 02/28/2010 - 21:11The Obama administration celebrated the anniversary of the passage of the American Recovery and Reinvestment Act, or economic stimulus, by pointing out the gradual recovery of the United States economy has resulted in “saving or creating two million jobs.” But young Americans continue to bear the brunt of what is still America’s worst recession since the Great Depression.
From December 2008 to December 2009, the employment of 16-24 year olds in the U.S. fell by 1.78 million, or a third of the total estimated drop in employment of 5.4 million. Only 41% of Millennials are working full time, a drop of 9 percentage points in the last few years, even as the proportion of older workers employed full time remained fairly stable.
The experience with hard times of Millennials, born 1982-2003, is one of the main reasons why they strongly support the classic liberal solution of effective government intervention in the economy. Recent Pew research, for example, indicates, that far more than older generations, a large majority of Millennials (71%) agrees that the government should guarantee that every citizen has enough to eat and a place to sleep. Millennials are also the only generation in which a majority (54%) disagrees with the contention that if something is run by the government it is usually inefficient and wasteful and a plurality (49%) rejects the belief that the federal government controls too much of our daily lives.
A recent study by UCLA professor Paola Giuliano, and her colleague Antonio Spilimbergo, clearly documents the impact of recessions on people who are between 18 and 25, “during which most beliefs on how society and the economy work are formed.” Their research found that individuals who experienced recessions much milder than our current Great Recession during these formative years believe that “luck rather than effort is the most important driver of individual success, support more government redistribution, and have less confidence in institutions.” Other research shows that people who think luck is the primary driver of success are more willing to increase taxes to pay for a more activist government. Giuliano and Spilimbergo’s findings support the observation that lies at the heart of William Strauss and Neil Howe’s generational cycle theory, namely that the “values, attitudes and world-views” acquired during this period of early socialization “become fixed within individuals and are resistant to change.”
The research of Giuliano and Spilimbergo also suggests that the Millennial Generation’s economic liberalism comes with a healthy dose of skepticism about the ability of institutions to help them meet their profound economic challenge. To fully restore Millennial confidence, government will need to take effective action to deal with the economy and reaffirm America’s tradition of economic mobility and rising middle class incomes. Beyond whatever short-term benefits President Obama’s stimulus program has provided, longer term more structural changes in the economy will need be made — starting with education.
Higher education remains an important antidote to low wage employment in such economic circumstances, but only if students complete their chosen field of study. Yale economist Lisa Kahn has found that “the labor market consequences of graduating from college in a bad economy are large, negative and persistent,” resulting in lower wages, in less prestigious jobs for extensive periods of time. Her research suggests that even college graduates fortunate enough to get a job still suffer a 6 to 7 percent initial loss in income for every one percent drop in employment. Even though the differential diminishes over time, her research found such unlucky graduates still experiencing a statistically significant 2.5% loss of wages fifteen years later.
Even so, those who get a four year college degree earn on average 35% more than those who leave college without getting a degree. Getting one or two years of post-secondary education and receiving an associate’s degree from a community college or a certificate from a career college also boosts wages above what they would have been without such a degree. One Florida study found that holders of certificates in particular occupations such as health care or IT earned 27% more than those who attended, but failed to complete, college. Associate degree holders earned 8% more than those who had no post-secondary education.
One major reason students aren’t able to get a degree or certificate is that three-fourths of associate degree or certificate seekers end up working to help cover their education and living costs. Meanwhile federal support for higher education has failed to keep up with rising costs so that more and more students find themselves financing their education with student loans of one type or another. In Indiana, for instance, 62 percent of those who do manage to graduate carry student loan debt averaging $23,264 per student. The loan burden in that state is even higher for graduates of for-profit, private colleges who leave school with an average debt burden of $32,650.
Increasing Pell Grant funding and the value of college tuition tax deductions are two steps government could take to address this problem. Reforming the student loan program to eliminate subsidies to banks as President Obama has advocated, and including student loans under any consumer protection agency that might be created as part of financial regulatory reform would also help address this problem that would fit with Millennial’s liberal perspectives.
The other major reason students fail to complete their post-secondary education is the inadequate preparation for college, especially in math and science, they receive in high school. This is something that parents of Millennials will tolerate no longer. As Neil Howe points out, "when these Gen-X "security moms" and "committed dads" are fully roused, they can be even more attached, protective and interventionist than Boomer [parents] ever were. . .They will juggle schedules to monitor their kids' activities in person. . . [and] will quickly switch their kids into - or take them out of - any situation according to their assessment of their youngsters' interests."
These “stealth-fighter parents” have already begun to move one of the largest and most consistently poorly performing school districts in the country, Los Angeles Unified, forcing the district to grant them more say in school curriculum and governance. Their success led California’s usually dysfunctional legislature to pass a “parent trigger” law empowering a majority of parents in a demonstrably failing school attendance area to fire the principal and half the teachers as part of a turnaround initiative. Congress should incorporate this very interventionist idea into its reauthorization of the framework federal education law when it comes up for renewal this year. It should also expand funding for the Obama administration’s innovative Race to the Top initiative, which rewards schools that improve student learning performance rather than simply subsidizing mediocrity.
All of these ideas will be resisted by those who believe that individual success is solely based upon effort and initiative and don’t believe in the efficacy of government efforts to revive the economy. Others with a stake in the status quo will argue against some of these ideas. But Millennials, whose lifetime of liberal economic beliefs have been forged by their experience with the Great Recession, will resist entreaties from those who offer only laissez faire economic policies or who try to delay dealing with these problems. They want government to act quickly and effectively, before they and their siblings are doomed to never enjoy the American Dream.
Morley Winograd and Michael D. Hais are fellows of the New Democrat Network and the New Policy Institute and co-authors of Millennial Makeover: MySpace, YouTube, and the Future of American Politics (Rutgers University Press: 2008), named one of the 10 favorite books by the New York Times in 2008.
Young People Living Off the System in Sweden
Sat, 02/27/2010 - 20:10There are those who believe that Sweden has a low level of unemployment. This is far from the truth. The combination of high taxes, generous government benefits and a regulated labor market has led to many Swedes to rely on handouts rather than work. The system does succeed in one thing: hiding the true unemployment.
A few years ago, the Swedish economist Jan Edling noted that the number of people on sick leave and early retirement tended to correlate strongly with unemployment figures. The reason, Edling explained, was that many of the unemployed were hidden from the statistics through these measures.
Far from being a right-leaning economist, Edling at the time worked for LO – an influential labor union with strong official and unofficial ties to the then-ruling Social Democratic party. The claim that the Swedish welfare state hid actual unemployment through various measures was unpopular among Swedish socialists. So unpopular in fact that Edlings report was not published, causing him to resign after 18 years faithful service.
Four years ago a center right government was elected with the promise to reduce visible and hidden unemployment. The government has had some success in this, at last before the financial crisis hit and again raised unemployment. Tax cuts and reduced generosity of government benefits have promoted work over dependence. However, among one group reliance on government has not decreased: young people who are relying on early retirement for their living.
The concept of relying on early retirement among the relatively youthful might sound a bit strange. Swedish politicians have even changed the term “early retirement” into “activity and sickness compensation” to make it sound more acceptable. And it has oddly enough become more or less an accepted fact that many young Swedes who cannot find a job instead rely on early retirement – often on a permanent basis.
Since 2004 close to 70,000 Swedes in the ages 20-39 have been supported by early retirement. This represents close to three percent of the total population among this age group living in the country. In the Stockholm region, where the labor market is strong, two percent of the young population is living on early retirement. In regions where jobs are scarcer, the figure is four percent. Even among the youngest group – those between 20-24 years – more than two percent of Sweden’s population is being supported by early retirement.
One reason for the popularity of early retirement is because of the increasing troubles for young Swedes to find employment. According to Statistics Sweden, the unemployment amongst those between 15-24 years was fully 24 percent in the beginning of 2009. Although Sweden does not have minimum wages set by the government, the vast majority of the employers have to follow labor union contracts and the contracts in turn include very high effective minimum wages.
Not only is the price of youth labor set too high for demand to meet supply, but employers find it too risky to hire inexperienced youth since rigid labor market regulation make it difficult to fire those who do not perform well on their job.
The high unemployment amongst youth is not only an economical, but also a social issue. Many young people feel depressed since they cannot find a meaningful purpose and cannot contribute to society. This feeling, strong among the youth who are not even officially employed, but rather hidden from the statistics through early retirement, sick leave or other systems.
The OECD measures the percentage of those who are officially declared to be outside of the workforce but view themselves as being unemployed. This group is referred to as “discouraged workers”. In countries such as Denmark, Germany and the United Kingdom only 0.1 percent of the labor force of 15-24 year olds is composed of discouraged workers. In Sweden, the figure is almost a hundred times higher.
The Swedish welfare system is seen as many as a role model. When it comes to creating opportunities for the youth however, Sweden could learn much from free-market systems. Or for that matter it could learn from neighboring welfare state Denmark, which has combined welfare mechanisms with a dynamic labor market. The combination, coined by previous Social Democratic Prime Minister Poul Nyrup Rasmusson as “flexicurity”, is far superior to the system of high effective minimum wages and rigid labor regulations introduced by the Social Democrats and their labor union allies in Sweden.
Nima Sanandaji is the CEO of Swedish think tank Captus, and author of a report on early retirement among the youth for the think tank Timbro.
Photo: by Claudio.Ar
Obama's Middle-Class Meltdown
Sat, 02/27/2010 - 10:31The rapid decline in public support for Democrats and President Obama represents one of the most breathtaking political collapses in modern times. Little over a year from a huge electoral triumph, President Obama’s level of support has dropped from around 65% to under 50%. The Democrats in Congress, who held as much as a 10% edge over the Republicans last spring, are actually losing a “generic” vote.
Many Republicans and conservatives may think this represents a confirmation of their values. Yet in reality, the Democratic meltdown has less to do with belated admiration for the GOP—their support as a party remains at historically low levels—than a question of a massive disconnect between the people in power and the large, middle-class majority.
The Great Disconnect reflects a growing chasm between the normative “wisdom” within political parties and their aligned media, academic and policy cadres. The Disconnect in part derives from the tendency of politicos and their associates to converse mostly with each other—and not develop much of a direct feel for that vast, and increasingly complex, country beyond the Beltway.
As President, Barack Obama’s Great Disconnect seems most obvious. Although he occasionally uses populist middle-class rhetoric, both Obama’s priorities and body language suggest his inspiration comes largely from the rarified world of the universities and Democratic Party contributors.
Not surprising then that he started with a stimulus package that, although one was needed, offered little to private sector Main Street businesses. Instead, the primary beneficiaries turned out to be Wall Street grandees, whose high salaries he variously denounces and excuses, and public employee unions.
Obama’s move was encouraged by the aging leadership of the Democratic Party, shaped by places like Nancy Pelosi’s San Francisco and Henry Waxman’s lushly affluent Beverly Hills. It has little to do with the views of the middle class who reside generally in smaller towns and less-than-tony suburbs—but some of the wealthiest, and most privileged, populations on earth.
President Obama’s other key constituency lies in the public sector unions, whose power in his home state of Illinois now rivals and perhaps surpasses that of the Daley machine. Even as middle-class voters see their pensions dwindle along with their housing prices and jobs, the public sector has waxed into something resembling the Blue Meanie in Yellow Submarine who consumes everything in sight, and ultimately itself.
Perhaps nothing so illustrates the Great Disconnect than the president and the congressional lions' embrace of the radical green climate change agenda. Still popular in upper-class urban areas and university towns, this agenda is notably less well-supported in middle and working class communities, particularly in the middle of the country.
Even before the Climategate revelations—which led to one top warmist figure admitting to the BBC that there had been in fact “no statistically significant” warming over the past fifteen years—the agenda was losing support, ranking it dead last among 20 priorities in a Pew survey last year. Now the public is becoming openly skeptical, with support for the notion of primarily human-caused warming falling since April from 47 to 35%.
President Obama must realize that prioritization of the climate agenda, along with other coastal liberal priorities, undermines Democratic support in the Great Plains and the Great Lakes, where the party recently has been making some significant gains. The recent withdrawals of Senators Byron Dorgan and Evan Bayh reflect the Democrats’ growing vulnerability in these regions. Recent polls in Iowa, where Obama won his signature primary victory in 2008, show the president’s popularity at less than 50 percent, in large part due to losses among independent voters.
Yet if Americans have been departing the Democrats, does it follow that they will shift en masse to the GOP? There is reason for skepticism here as well. After all, this is the same party that, along with the Democrats, supported massive spending under George Bush and actively promoted the disastrous de-regulation of the financial markets. The prescience of the likes of former Majority Leader Dick Armey—a co-conspirator in the Bush era’s profligacy—at the forefront of the Tea Parties should worry even the most credulous small-government activist.
The Republican claim to the populist mantle is even more suspect. Republicans like House Minority Leader John Boehner have cozied up to Wall Street, hoping to take advantage of rising “buyer’s remorse” among the grandees. Suggesting Republicans could shield the financial sector from even modest Democrat efforts to make them face consequences for their loathsome and disastrous folly, they unintentionally show that their critique of the president’s “crony capitalism” largely involves shifting the identity of the cronies.
The Republicans also have a bit of a demographic problem. Their Neanderthal stance on social issues varies radically from the rising millennial generation, and threatens to alienate them permanently. And perhaps even more seriously, the strong nativist wing of the party, epitomized by Tea Party keynoter former Representative Tom Tancredo, represent a threat to the other large emerging voting block, immigrants and their offspring.
If you want to see an illustration of what this means, just examine the plummeting GOP registration levels in increasingly multi-racial California. For the first time in modern history, according to veteran political observer Allan Hoffenblum, there is not a single congressional, state Senate or Assembly district in the state with a majority Republican registration.
Although the Republicans are riding high now, do not overestimate their ability to seize the field now so ineptly being vacated by the Democrats. It may well turn out that President Obama still may overcome the Great Disconnect before the GOP does. Obama’s ability to change direction already can be seen in such things as his new-found enthusiasm for nuclear power and more drilling on public lands. His most recent jobs bill also has more of a focus on promoting private employment growth than past efforts.
Ultimately, the party that wins in 2010 and beyond will be the one that addresses the real issues of this age—the battle for private sector jobs and upward mobility—that matter to the vast majority of Americans. It is on those issues, not global warming, ethnic purity or gay marriage that the political future will now turn.
This article originally appeared at The Daily Beast.
Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in Febuary, 2010.
Photo: Official White House Photo by Pete Souza
Eminent Domain as Central Planning
Fri, 02/26/2010 - 08:38Free markets are out of vogue. The unfortunate lesson that policymakers have learned over the past two years is that a big, brainy government that supposedly creates jobs is superior to irrational, faceless markets that just create catastrophic errors. So Washington has seized on the financial and economic crises to enlarge its role in managing the economy—controlling the insurance giant AIG, for example, and trying to maintain high housing prices through tax credits and “mortgage modification” programs.
But when it comes to central economic planning, New York City and State are way ahead of the feds. Empire State politicians from both parties already believe that it’s their responsibility to replace people and businesses in allocating the economy’s resources. They’re even confident that their duty to design a perfect economy trumps their constituents’ right to hold private property. Three current cases of eminent-domain abuse in New York show how serious they are—and how much damage such government intrusiveness can wreak.
Brooklyn’s Prospect Heights, industrial and forlorn for much of the late twentieth century, was looking better by 2003. Government was doing its proper job: crime was down, and the public-transit commute to midtown Manhattan, where many Brooklynites worked, was just 25 minutes. That meant that the private sector could do its job, too, rejuvenating the neighborhood after urban decay. Developers had bought 1920s-era factories and warehouses and converted them into condos for buyers like Daniel Goldstein, who paid $590,000 for a place in a former dry-goods warehouse in 2003. These new residents weren’t put off by the Metropolitan Transportation Authority’s railyards nearby, and they liked the hardwood floors and airy views typical of such refurbished buildings. They also settled in alongside longtime residents in little houses on quiet streets. Wealthier newcomers joined regulars at Freddy’s, a bar that predated Prohibition. Small businesses continued to employ skilled laborers in low-rise industrial buildings.
But Prospect Heights interested another investor: developer Bruce Ratner, who thought that the area would be perfect for high-rise apartments and office towers. Ratner didn’t want to do the piecemeal work of cajoling private owners into selling their properties, however. Instead, he appealed to the central-planning instincts of New York’s political class. Use the state’s power to seize the private property around the railyards, he told Governor George Pataki, Mayor Michael Bloomberg, and Brooklyn borough president Marty Markowitz. Transfer me the property, and let me buy the railyards themselves below the market price. I’ll build my development, Atlantic Yards, around a world-class basketball arena.
New York, in short, would give Ratner an unfair advantage, and he would return some of the profits reaped from that advantage by creating the “economic benefits” favored by the planning classes. Architecture critics loved Frank Gehry’s design for the arena. Race activist Al Sharpton loved the promise of thousands of minority jobs. The Association of Community Organizations for Reform Now (Acorn) loved the prospect of administering the more than 2,000 units of “affordable” housing planned for the development, as well as the $1.5 million in loans and grants that Ratner gave it outright. When the state held public hearings in 2006 to decide whether to approve Atlantic Yards, hundreds of supplicants, hoping for a good job or a cheap apartment, easily drowned out the voices of people like Goldstein, who wanted nothing from the government except the right to keep their homes.
Can New York legally seize private property and transfer it to a developer purely for economic development? The Fifth Amendment to the U.S. Constitution allows the government to take property for a “public use,” long understood to mean such things as roads and railways, so long as it makes “just compensation” for them. Starting around the 1930s, a number of court cases began to broaden “public use” to include more nebulous “public purposes,” such as slum clearance. And in 2005, in Kelo v. New London, the Supreme Court decided that these “public purposes” could even include economic development. But New York’s constitution theoretically holds the state to a higher standard. In 1967, Empire State voters voted not to add a “public purpose” clause to their constitution, preferring to stick with the stricter requirement of “public use.”
The state hasn’t let this inconvenience derail its plans for Prospect Heights, however. For seven decades, courts have let New York seize and demolish slum housing if it’s blighted—which New York State defines as “substandard” and “unsanitary.” So the Urban Development Corporation (UDC), a public entity of New York State, decided that the “public use” of Atlantic Yards would be blight removal. The city had already designated part of the neighborhood as “blighted” 40 years earlier, long before its resurgence. As for the rest, the UDC commissioned consultants—previously employed by Ratner—who soon returned the requisite blight finding.
But wait, you say: people don’t buy half-million-dollar apartments in “substandard” or “unsanitary” neighborhoods. You’re right; that’s why the consultants had to stretch. In the 1930s, as Goldstein’s attorney, Matthew Brinckerhoff, pointed out, “substandard” and “unsanitary” meant “families and children dying from rampant fires and pestilence” in tuberculosis-ridden firetraps. In 2006, by contrast, the UDC’s consultants found “substandard” conditions in isolated graffiti, cracked sidewalks, and “underutilization”—that is, when property owners weren’t using their land to generate the social and economic benefits that the government desired.
In New York, this creative definition of blight is the new central-planning model. Consultants have also cited “underutilization” in West Harlem, where the city’s Economic Development Corporation wants to take land from private owners and hand it to Columbia University for an expansion project. Says Norman Siegel, who represents the owners: “A private property owner has the right to determine the best productive use of his property. It’s not a right to be ceded to any government.”
And in Queens, the Bloomberg administration is preparing a similar argument to grab swaths of Willets Point, an area adjacent to Citi Field that’s populated with auto-repair shops. The city’s recent “request for qualifications” from would-be developers drew a sharp response from the people who owned the land: “We . . . hold the most significant qualification of all: we own the properties. We are motivated to improve and use our own properties, consistent with the American free market system. We would have done so in spectacular fashion already, had the city upheld its end of the bargain by providing our neighborhood with essential services and infrastructure.” Instead, the city has done the opposite, letting streets disintegrate into ditches to bolster its blight finding. The perversity is astonishing: rather than doing its own job of maintaining public infrastructure and public safety, the government wants to do the private sector’s job—and is going about it by starving that private sector of public resources.
Property owners have looked to the judiciary to check the overweening grasp of the legislative and executive branches. But courts can be wrong for longer than it takes to save a neighborhood. In Brooklyn, Goldstein and his neighbors have lost their lawsuits—most recently, in New York’s highest court, the court of appeals. In November, the court decided 6–1 that “all that is at issue is a reasonable difference of opinion as to whether the area in question is in fact substandard and insanitary. This is not a sufficient predicate for us to supplant [the state’s] determination.” The court essentially abdicated its duty to protect property owners from the governor and the Legislature.
Nine days later, the West Harlem owners fared better in a lower court. The first department of the state supreme court’s appellate division found, 3–2, that the blight studies that the city and state had commissioned to justify their rapacity were “bereft of facts”—and further tainted by the fact that one blight consultant also worked for Columbia. The blight designation “is mere sophistry,” the majority concluded, “hatched to justify the employment of eminent domain.” The court further noted that “even a cursory examination of the study reveals the idiocy of considering things like unpainted block walls or loose awning supports as evidence of a blighted neighborhood. Virtually every neighborhood in the five boroughs will yield similar instances of disrepair.”
The selective and arbitrary process that deems one neighborhood blighted while leaving a similar neighborhood alone also violates due process, the justices went on, as “one is compelled to guess what subjective factors will be employed in each claim of blight.” Another violation: the government responded poorly to property owners’ document requests under the state’s freedom of information law, hampering their right to mount a solid case. Such requests are particularly important in eminent-domain cases because New York property owners don’t enjoy the right to a trial with a discovery phase, but must go straight to appeals court—a seventies-era “reform” meant to speed up development projects.
The Harlem owners were able to convince the lower court partly because they had commissioned their own “no-blight” study. “We said, ‘Let’s create our own record . . . as a counterweight,’ ” said Siegel. The owners also presented as evidence a government study, performed before Columbia showed interest in the land, that West Harlem was revitalizing itself. This is all very well—but property rights shouldn’t depend on owners’ creativity and resourcefulness in proving beyond all reasonable doubt that their land isn’t blighted.
Further, the lower-court ruling is a tenuous victory. The case is proceeding to the court of appeals, and though Siegel is “cautiously optimistic” that it will rule in his clients’ favor, there’s no way to be sure. Meantime, Goldstein and fellow residents and business owners in Brooklyn have asked the court of appeals to reconsider its Atlantic Yards ruling after it rules on Harlem. But the starkly different decisions in the Harlem and Brooklyn cases, coming so close together, have pointed up the need for the Legislature and Governor David Paterson to create clear standards for the government’s power to seize property.
An obvious step is to dispense with “underutilization” as a justification for a taking. As the court noted in the Harlem case, “the time has come to categorically reject eminent domain takings solely based on underutilization. This concept . . . transforms the purpose for blight removal from the elimination of harmful social and economic conditions . . . to a policy affirmatively requiring the ultimate commercial development of all property.”
But the state should go even further and eliminate blight itself as a justification for property seizure. Since the sixties, when creeping blight seemed to threaten the city’s existence, New York has learned that the real remedy for “substandard” conditions is good policing and infrastructure, which create the conditions for people and companies to move to neighborhoods and improve them. As for 1930s-style “unsanitary” conditions, modern health care, infrastructure, and building codes have eliminated them. Today, the biggest risks to public health are often on government property: dangerous elevators in public housing, for instance, or the 2007 fire that killed two firefighters in the Deutsche Bank building in lower Manhattan, owned by the city and state since 9/11. Unless it needs property to build a road, a subway line, a water-treatment plant, or a similar piece of truly public infrastructure—or unless a piece of land poses a clear and present danger to the public—the state should keep its hands off people’s property.
Eminent-domain abuse, dangerous though it is, is a symptom of a deeper problem: government officials’ belief that central planning is superior to free-market competition. That’s what New York has decided in each of its current eminent-domain cases. In Brooklyn, high-rise towers and an arena are better than a historic low-rise neighborhood; in Harlem, an elite university’s expansion project is better than continued private investment; and in Willets Point, Queens, almost anything is better than grubby body shops.
To cure yourself of the notion that the government can do better than free markets in producing economic vitality, stroll around Atlantic Yards. You’ll walk past three-story clapboard homes nestled next to elegantly corniced row houses—the supposedly blighted residences that the state plans to demolish. You’ll see the Spalding Building, a stately sporting-goods-factory-turned-condo-building that, thanks to Ratner and his government allies, has been slated for demolition and now stands empty. You’ll peer up at Goldstein’s nearly empty apartment house, scheduled to be condemned and destroyed.
And you’ll see how wrecking balls have already made the neighborhood gap-toothed. A vacant lot, for example, now sprawls where the historic Ward Bakery warehouse was, until recently, a candidate for private-sector reinvestment. Today, Prospect Heights finally shows what the state and city governments want everyone to see: decay. The decay, though, isn’t the work of callous markets that left the neighborhood to perish. It’s the work of a developer wielding state power to press property owners to sell their land “voluntarily.” It’s also the result of a half-decade’s worth of government-created uncertainty, which stopped genuine private investment in its tracks.
Such uncertainty offers a crucial lesson to the rest of the nation, and not just in the area of eminent domain. Whenever government fails to confine itself to a limited role in the economy, it creates similar uncertainty. Even when the results aren’t as poignantly obvious as they are in Brooklyn, the private economy suffers—whether it’s financial or auto bailouts unfairly benefiting some firms at the expense of others, or mortgage bailouts unfairly benefiting some home buyers at the expense of others. Free markets may be imperfect, but they’re far better than the alternative—the blight of arbitrary government control and the uncertainty that it creates.
This article originally appeared at City Journal. Research for this article was supported by the Brunie Fund for New York Journalism.
Nicole Gelinas, a City Journal contributing editor and the Searle Freedom Trust Fellow at the Manhattan Institute, is a Chartered Financial Analyst and the author of After the Fall.
Photo: Tracy Collins
Olympic Games: Greece's Gold Medal For Debt
Thu, 02/25/2010 - 20:58Although I cannot imagine that it will have much appeal in the ratings beyond C-Span 2, a terrific new reality program, Euro Bomb, could be produced around the survival of the Greek economy.
The founder of both the ancient and modern Olympic games is in the midst of a debt crisis that threatens not just to send a few bondholders off the island, but has the potential to blow up the European Union’s currency zone.
The first indication of a problem with Greeks bearing debts was when the yield on the country’s sovereign debt soared past seven percent; in Germany, similar paper pays only three percent, although, in theory, both countries are members in good standing of the Euro zone, and thus have an implicit guarantee from the community.
Greece joined the European Union in 1981, embraced the Euro in 2002, and staged the summer Olympics in 2004, steps that were intended to lead the country out of its Balkan past. Alas the only Greek medal was for the cost overrun, leaving Athens with garlands of high-priced debts.
Then it turned out that the Greek government had cooked the books that report the country’s budget deficit. It was actually 13 percent of Gross Domestic Product (GDP), as opposed to the 3 percent that Athens had been reporting to Brussels. As late as 2009, Greek Prime Minister George Papandreou was assuring voters (some of whom were in the streets) that there was no need for austerity programs or budget cutbacks.
Issuing phony financial statements has been a Greek sport of Olympian dimension since the time of Socrates. But the consequence of the latest illusion has been that the European Union is now confronted with the invoice for its continuing unity.
For Greece, the choices are stark, but clear. It can default on its debts and get bounced from the European Union; it can cut public expenditures and watch the streets fill up with unemployed public sector workers; or it can throw itself on the mercy of the European Union or the International Monetary Fund (IMF), which would put in place a stabilization fund to keep the country afloat.
The hard decisions are for the European Union, which, if it bails out Greece, could be forced to do the same, at a later date, for Portugal, Spain, Italy, Ireland, and possibly the United Kingdom, all of which took to borrowing as if it were pitchers of sangria.
To be sure, the European Union could deliver Greece to the IMF, the vulture that normally descends on the roadkill of bankrupt countries. In recent years, the IMF has picked through the ruins of Argentina, Turkey, South Korea, and Mexico, and then returned them to the investment community, minus a few state assets and plus a lot of unhappy voters.
But what does it say about the financial stability of the European Union — remember all the press releases about the United States of Europe and its standing as a global economic zone? — if Brussels cannot clean up the Greek mess, which only represents two percent of the European economy.
Further, in weighing options for Greece, there is the specter of the political rivalry between the French president, Nicholas Sarkozy, and the IMF President, Dominique Strauss-Kahn, who is thinking of running for the French presidency in 2012 as the Socialist candidate.
President Sarkozy has an Olympian-sized ego, and the last thing he wants is to run against someone who could claim that he, not Sarko, had saved the European Union.
Without the full faith and credit of the international financial community, the European Union (read the taxpayers of Germany) might not want to bail out the Greeks, who are perceived as lounging at the beach on the dole while the bail-posters trudge off to a factory in Dortmund.
Plus, the numbers in the great Greek unraveling are substantial: $20 billion is needed by April. National debt is approaching 100 percent of GDP ($380 billion), while the country has a budget, trade, and current account deficit, and a contracting economy. And these numbers are nothing when compared with the debts in Portugal, Spain, and Italy.
The central weakness of the Euro zone is that it has a common currency and a European Central Bank, but none of the political control that normally comes with monetary responsibility.
Decisions on the issuance of debt, on budget deficits, and public spending are made in each EU country, not Brussels, which thus finds itself as a lender of last resort in an economic zone over which it has only moral suasion (and very little cash).
Normally when a country tanks, its currency depreciates, which stimulates exports and promotes recovery. (This explains some of the American recovery.) But Greece is tied to the Euro, which remains overvalued in relation to the dollar, so things like tourism and exports are expensive.
For the moment, the United States feels itself to be above the Greek crisis. Even the dollar has rallied in the wake of Greek illiquidity. But writing in the Financial Times, the historian Niall Ferguson makes the point that “a Greek crisis is coming to America.”
His argument is that the projected budget deficits and international borrowings of the Obama administration give the United States Greek-like financial qualities, such as debt equal to GDP, and that it is only a matter of time before vulture capitalists come to roost in Washington, concluding, “Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase ‘safe haven.’ US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.”
While waiting for an international rescue, the Greek government can rail against hedge-fund speculators (who went short the country), international banks (who sold them all this expensive, junk-grade paper), and world capitalism (which is treating Greece as if it were the beach house of the Lehman brothers).
Or, in the spirit of reality television, it can invoke the economic philosophy of Alexis Zorba, aka Zorba the Greek, whose idea of a bailout package involved a lot of grilled lamb and ouzo. “No more fooling around, not in this place,” he said. “We'll pull our pants up and make a pile of money.”
Matthew Stevenson is author of the recently published Remembering the Twentieth Century Limited. He lives in Europe.
The 10 Percent Solution to Urban Growth
Wed, 02/24/2010 - 21:39What if we achieved the urbanist dream, with people deciding en masse to move back to the city? Well, that would create a big problem, since there would be no place to put them. Many cities hit their peak population in 1950, when the US total was 150 million. Today it is over 300 million, with virtually all the growth taking place in the suburbs.
So where would these new urbanites reside? With the enormous losses in our urban housing stock, our cities lack the residences to hold even their 1950 population. A recent survey found that one third of all the lots in Detroit are now vacant, for example. And even if all the old housing was rebuilt, declines in household sizes, particularly in urban areas, has reduced the effective carrying capacity of the old urban fabric even at historic densities.
But there's an even bigger challenge to wholesale urbanization from future population growth. The Census Bureau estimates that the US will add nearly 100 million more new people by 2050. If you look at the few cities in the country that have large inhabited urban cores, they hold a relatively small percentage of the current population. New York City, Los Angeles, Chicago, Philadelphia, San Francisco, Boston, Seattle and Washington, DC combined barely hold 20 million people. Even if all these cities doubled in population by 2050, they would only be able to hold 20% of the net new growth expected over the next four decades.
And achieving even that level of urban growth is simply not realistic. Most of the existing highly urbanized cities are already largely full of buildings. Even where land is available, zoning restricts what can be built there, and increasing densities is politically difficult. New York City has been the most aggressive on the growth front, rezoning 20% of the city under the Bloomberg administration, although many sections have actually been downzoned.
But even this effort could accommodate a projected one million new residents by 2030. Chicago is going the other direction. When it introduced new zoning under the Daley administration, permitted densities were actually reduced in most cases, though Chicago remains perhaps the only truly urban city with large amount of vacant or underutilized land for redevelopment. Ed Glaeser calls for building skyscrapers in California, but San Francisco residents are imbued with a strong anti-development mindset and have long railed against the “Manhattanization” of their city.
America could not be reshaped from a primarily suburban to a city-centric country without a massive shift in local political mind-sets. Rather than attempting that exercise in futility, urban advocates should adopt much more modest goals that, although limited, could be completely transformational for our cities.
There's been much made of the return to the city. Indeed, large tracts of the urban cores of many places have been utterly remade. But most of the cities where this has happened have been America's largest tier one cities – New York, Chicago, Boston, etc. They have achieved the point of self-sustaining urban growth, and are well positioned to attract more residents, particularly the upscale and childless, young singles and students and recent immigrants.
In contrast, smaller cities have seen a few hundred downtown condos and such, but not a real urban renaissance. There is still a lot of work to do in those places.
The way to do this is to adopt the “10 percent solution”. That is, for most cities, they should develop a strategy that tries to capture somewhere between 5 and 15 percent of the net new growth in their metro areas. If a city can get more, great. But for any growing region, even 10 percent would create a dynamic of massive change in the urban core.
Consider Indianapolis, a region with healthy regional growth that is above average but not among the nation's leaders. The Indianapolis metro area is adding people at a rate of about 200,000 people per decade. Center Township, which is the urban core of the city, peaked in population in 1950 at 337,000 people. Today it is at 167,000, a decline of 50%, on par with America's greatest urban collapses
But what if the urban core managed to capture 10% of that new growth? That's 20,000 new residents, very easy to physically accommodate within a decade. What would 20,000 new residents do to central Indianapolis? What would it do to the entire dynamic of the city? It could be completely transformational.
Such a modest capture of new population would catapult central Indianapolis into one of the absolute top growth areas in the region. Only one suburb is on track to add that many or more people during the 2000s. Many other suburbs are considered prosperous and fast growing despite adding only a few thousand people. Even that limited influx creates a pattern of growth vs. stagnation and decline. That's where urban Indianapolis needs to get.
One of the great advantages of targeting 10% market share in new growth is that it frees the city to pursue a market segmentation strategy. It doesn't have to try to convince vast numbers of suburbanites – the vast majority of whom are likely to stay in place – to make a radical lifestyle change. Rather, the core can market to specific segments that it is best positioned to attract, and put together the most compelling and differentiated product to attract them.
One potential market is those who want an urban environment but can't afford to live in one of the expensive tier one cities. They could market themselves to people who find themselves priced out of the biggest cities, but would settle in a smaller, but still vibrant urban environment.
Can Indianapolis do it? As with many cities, there is already some evidence that it could. In the 2000s, decades of population decline came to an end in 2006, and Center Township started adding an estimated 400 people per year. The jury is still out on whether the estimates are confirmed by the census count and whether it can be sustained, but it still amounts to 4,000 people per decade, showing that the city is already starting to make progress.
Cincinnati provides another example. It is a metro growing a bit less than the national average, but still adding people at a rate of about 150,000 per decade. The city of Cincinnati declined from a peak of 503,998 in 1950 to 333,336 today, a loss of 170,000 people. Again, if the city captured 100% of just regional growth, in little more than a decade it would be back to a record high population. That's not realistic of course, but 10% of that total, or 15,000 people, would still make a tremendous impact on the city. Like Indianapolis, there's already some sign of an inflection point, as the city population began growing again in the 2000s.
Can this 10% solution really happen? The answer is a resounding Yes, because it is already happening in Atlanta. Its reputation as a sprawlburg overshadows the fact that it is experiencing one of America's most impressive urban core booms. The city of Atlanta has added almost 120,000 new residents since 2000, an increase of 28%. This is a mere 10.5% of the metro area's growth during that time – but it has totally changed the city. Atlanta lost over 100,000 people from its 1970 peak, but is now at an all time high.
Viewed in this realistic light, there is huge reason for optimism about rebuilding the urban cores of even our Rust Belt cities. Frankly, with the required market share of growth to get there so low, there's no excuse for not making it happen. If city leaders can't figure out how to attract even 10% of the market, they deserve to lose. If they can do better, great. And once they've captured that 10% base, and restarted a growth pattern, they can figure out how to get more ambitious and expand market share.
For regions with population decline, like Detroit and Cleveland, there's a different and much more challenging dynamic. But for cities with even modest regional population growth, there's all the opportunity in the world to attract new urban residents and completely change the game for their urban cores.
Aaron M. Renn is an independent writer on urban affairs based in the Midwest. His writings appear at The Urbanophile.
Photo: Carl Van Rooy (vanrooy_13)
What is the Answer to the Suburban Question?
Tue, 02/23/2010 - 21:19We have recently assembled a special issue of the journal Cities with the title “The Suburban Question”, and we assume that many readers will assume the answer is “who cares”? The term ‘sub-urbs’ connotes a lesser form of urban life, and for decades it has been used dismissively to denote anything plastic, even hypocritical. Novelist Anthony Powell described one of his unsympathetic characters possessing a ‘‘face like Hampstead Garden Suburb”; the New York Times recently described architect Robert Stern as ‘‘a suede-loafered sultan of suburban retrotecture”. In the old days, record stores had ‘urban’ bins full of gangsta, but nothing marked ‘suburban’, although it is always easy to use the suburbs as a backdrop for duplicity, as in American Beauty, or the first series of Weeds (set in a gated community, a double score!).
There has been some academic attention—Dick Walker, David Harvey, and of course Kenneth Jackson all wrote lasting pieces about the suburbs. But in these, they always appear as objects of inquiry, rather than subjects in their own right; and if academics live amongst the ‘little boxes of tickytacky’, they rarely write about them. This is more than unfortunate, for many reasons—the most obvious is that by most definitions, most of us are indeed suburbanites. But while there are endless dissertations on public housing, the decline of the inner city, and the much discussed revitalization of the inner city, there is precious little on their further-flung counterparts.
It’s hardly the case, to answer the unspoken question, that there is nothing interesting to research ‘out there’. What about updating research on the ‘growth machine’? No one has really done any detailed work on the complexities of the home building industry, with its rigid design aspirations and complex financial connections. There is the gated community, which is still portrayed as ‘Fortress America’ even though there are significant proportions of Hispanic households living in gated communities, and many of these are rental properties and not the upscale compounds portrayed in textbooks. And there is the Home Owner Association. Despite the fact that millions of Americans live in them, relatively little research has been done on this important aspect of governance since the term ‘Privatopia’ was coined nearly two decades ago.
A few authors have tried to push back against this indifference, arguing that suburbs appear to be ‘good places for most people’. Yet the reality that affordable homes-and-gardens are unquestionably popular does not seem to matter. In almost any manner imaginable, the suburban lifestyle has been savaged. Sprawl causes obesity; it destroys downtowns; it causes global warming. In Metroburbia, Paul Knox argues that the suburbs have turned us into monsters of capitalist consumerism, the sagging SUVs necessary to carry the wobbling masses from mall to McMansion.
It is easy to argue that American suburbs are unsustainable, but to echo Peter Marcuse’s famous rhetorical question—‘sustainable for whom?’ Vibrant cities—New York, San Francisco, Boston—are expensive cities, and while that fabled creature, the Creative Worker (homo Floridian) is willing and, more importantly, able to pay large sums to live in very small spaces, most of us are not. Suburbs have attracted paying customers precisely because housing costs are low and conditions are attractive. Not many cool public spaces, but that’s less important to most people past their college years.
This is the backdrop to the papers that we have collected in our special issue. Its aim is to present work that asks ‘what is happening in the suburbs, in terms of the built form, the economy and social relations’. They are not necessarily written ‘in defense of suburbs,’ but engage suburbs as if they matter. Nick Phelps leads off by emphasizing the contribution that suburbs make to our local and national economies. He reminds us of the transfers there of jobs and the growing importance of suburbs to the urban region and the economic health of our nations. He closes with an urgent reminder that the "economic centrality of suburbs within the contemporary economy should, perhaps more than anything else, signal the need for a re-balancing of urban studies to be more fully suburban in academic and policy focus."
A perfect example of this appears in a study of Phoenix by Carol Atkinson Palombo and Pat Gober. Their analysis of new housing construction in the prior two decades indicates trends that span different types of multi-family housing in suburban locations. They note, "densification no longer equates to urban infill but takes many forms and occurs all over the metropolitan region". A complementary article by Roger Keil and Douglas Young focuses on their empirical work in Toronto, and especially what they have termed ‘the in-between city’. These places are "not quite traditional city and not quite traditional suburban", forgotten geographies where many live and where their infrastructure reminds us that the placing of ‘urban versus suburban’ neglects the many shades of in-between urban places that require planning and policy attention.
Toronto is the focus of another paper, in which Susan Moore explores the tenets of New Urbanism. In four case studies, she explores sub/urban forms, showing that the general edicts of the "densification-is-good" movement are contextualized in different settings, and reveals endless rounds of compromises between developers, planners, politicians and residents. In the end, this design imperative is unable to transcend the "urbanization of the suburbs or the suburbanization of the urban," and once more we are challenged by the need to confront the assumed distinction between urban and suburban developments, or even cities and suburbs themselves.
This theme is given additional attention in a further paper, by noted Turkish urbanist Feyzan Erkip, whose work explores, and contrasts, the new manifestations of Westernization in Ankara—malls and gated communities—with more traditional neighborhoods. She finds little difference between the views of the populations in the old and new, but the meanings that these new design features take on are very much conditioned by their context. For instance, the malls have a liberating veneer for Turkish women, who feel socially threatened in the streets but not in the private shopping districts. Conversely, gated communities adopt familiar design features but unlike their Western counterparts, these are essentially up-scale squatter settlements; this indeterminate legal status is attractive for some residents because it makes their homes less open to search by law enforcement or tax officials.
We conclude our collection, and this piece, with a simple response: the answer to the suburban question is that they possess a rich history and a dynamic present and therefore demand more attention and a serious research agenda. We call for more academic attention to be given to places where a majority of Americans, many Europeans, and a growing number of Asians, Africans, and Latin Americans live. Urban studies should either become inclusive of all parts of the city—from edge to center—or the field of Suburban Studies, spearheaded by the New Suburbanism, is long overdue.
Andrew Kirby is the editor of the interdisciplinary Elsevier journal “Cities.”This is his 20th year as a resident of Arizona. Ali Modarres is an urban geographer in Los Angeles and co-author of City and Environment.
Welcome to Ecotopia
Mon, 02/22/2010 - 21:35In this era of tea-partying revolutionary-era dress-ups, one usually associates secessionism with the far right. But if things turn sour for the present majority in Washington, you should expect a whole new wave of separatism to emerge on the greenish left coast.
In 1975 Ernest Callenbach, an author based in Berkeley, Calif., published a sci-fi novel about enviro-secessionists called Ecotopia; a prequel, Ecotopia Rising, came out in 1981. These two books, which have acquired something of a cult following, chronicle--largely approvingly--the emergence of a future green nation along the country's northwest coast.
Aptly described by Callenbach as "an empire apart," this region is, in real life, among the world's most scenic and blessed by nature. Many in this part of America have long been more enthusiastic about their ties to Asia than those with the rest of the country. It is also home to many fervent ecological, cultural and political activists, who often feel at odds with the less enlightened country that lies beyond their soaring mountains.
Until the election of Barack Obama, the Pacific Northwest certainly was separating from the rest of America--at least in attitude. After George W. Bush's victory the 2004 presidential election, the Seattle weekly The Stranger published an angry editorial about how coastal urbanites needed to reject "heartland values like xenophobia, sexism, racism and homophobia" and places where "people are fatter and dumber and slower."
Such a narrow, cynical view of the rest of the country is in line with Callenbach's Ecotopia novels, in which the bad guys--representatives of American government and corporations--are almost always male, overweight and clueless about everything from technology to tending to the earth.
Of course, would-be Ecotopians have much of which to be proud. The three great cities of the region--San Francisco, Portland and Seattle--easily rank among the most attractive on the continent. They all boast higher-than-average levels of education and--at least around San Francisco and Seattle--some of the world's deepest concentrations of high-tech companies.
Yet for all their promise, the Ecotopian regions cannot claim to have missed the current recession. Downtown Seattle currently suffers a vacancy rate in excess of 20%, the highest in decades; last year apartment rental rates dropped 13.8%, the steepest decline among American metros. Meanwhile vacancies in the Silicon Valley area south of San Francisco have soared to above 20%. By early this year, there was enough unoccupied office space in the Valley to fill 15 Empire State Buildings.
This may seem a bit counter-intuitive for a region that boasts the headquarters of Microsoft, Costco, Amazon, Intel and Apple. But while such companies provide lots of high-wage employment, they are no longer enough to spark much growth across the region's economy. The San Francisco area has actually lost jobs over the past decade and shows little sign of recovering its once prodigious growth rates.
But easily the weakest of the economies has been Portland, which lacks the presence of major anchor firms like those in greater Seattle or the Bay Area. Portland's unemployment rate has been well over 10% since late last year.
A wave of youthful migration has made the city a slacker haven for the past decade and, in turn, exacerbated unemployment figures. Homeless kids now crowd the downtown area, which, although far from destitute, does appear pretty grungy in places.
Yet, like the Ecotopians in the Callenbach novels, Portland residents and politicians seem nonplussed about their anemic economic performance. After all, the city voted heavily--despite solid opposition from the rest of the state--to raise Oregon's taxes on wealthy individuals and corporations, a move likely to deter new in-bound investment.
"You don't have a big focus here on economic development," observes Stephen B. Braun, dean of the School of Management at Portland's Concordia University. "There's much more emphasis on quality of life than on making a living."
The proof: Portland may have high unemployment, but the big idea around city hall is not how to promote jobs but about investing an additional $600 million in bike lanes.
All these places, of course, avidly endorse green jobs even if there's little prospect they could replace the jobs being lost in the fading blue-collar sectors. A growing green job sector needs a vibrant economy that produces things and builds new buildings, notions that have little currency across much of the region.
This anti-growth attitude reflects that of Callenbach's Ecotopia, which favors a "stable state" economy over job or wealth creation. Ecotopian politics explicitly ban both population increases and the private automobile.
While the mayors of Portland, San Francisco and Seattle are hardly that extreme, they could propose policies that would make driving more burdensome. And they certainly seem to do wonders in chasing would-be baby-makers out of the city. All three cities have among the lowest percentages of children of any in the U.S.
Perhaps the toughest issue facing the Ecotopian political economy lies with the issue of class. Callenbach's Ecotopia adopts something of an anarchic socialism; the cities of the real ecotopia have tended toward ever greater class bifurcation.
San Francisco, for example, boasts one of the highest per capita incomes in the nation and remains a favorite destination for inherited wealth, whether among individuals or nested in nonprofits. Yet according to the Public Policy Institute of California, if the cost of living is applied, San Francisco ranks high among urban counties in terms of its concentration of poverty.
It doesn't help that the city's economy has been hemorrhaging corporate headquarters and mid-range middle-class jobs for decades. High-end workers commute to Google and other Valley companies, and others work in the financial or media sectors, but many mid-range jobs have been lost, many of them to more affordable business-friendly locales in places like Colorado.
As middle-class jobs disappear, Ecotopia's cities increasingly resemble restrictive communities that are anything but diverse. As analyst Aaron Renn has pointed out, Portland and Seattle stand as among the whitest big cities in the nation. And San Francisco's once vibrant African-American population has been dropping for decades.
In the coming years this pattern will likely become more pronounced in Seattle and Portland as well. These cities continue to attract many well-educated people, particularly from California, who in turn bring with them both significant accumulated wealth and anti-growth attitudes.
Strict "green" planning regimes are also accelerating the decline of the local middle class by driving housing prices up, greatly diminishing the once wide affordability for the middle class. Seattle's regulatory environment, according to one recent study, has bolstered housing prices in the region by $200,000 since 1989. The percentage of families who could afford a median price home in the area has fallen by more than half.
Many observers see a similar outcome from Portland's widely ballyhooed planning regime. Despite the massive acceptance by planners as something of a model for the restored city, the vast majority of all job and population growth in the region has occurred at the less pricey fringes, including across the river in Vancouver, Wash., which lies outside the fearsome Portland planning regime.
So what is the future for the region, and particularly the eco-cities? If the country starts moving toward the center, and even the right, you can expect Ecotopian sentiment to rise again, perhaps not to the point of secession but expressed in attitude.
But this may not be all bad. As America's population grows and other regions rise, perhaps it's helpful for the various parts of the country to experiment with different systems. Short of civil war, there's something to be said for relentless, even if sometimes daft, experimentation at the local level. The rest of country may not follow all their strictures, but our would-be Ecotopians could produce some interesting and even usable ideas.
This article originally appeared at Forbes.com.
Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in Febuary, 2010.
