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Are Baby Boomers Turning Out to be the Worst Generation?

Sun, 09/04/2016 - 22:38

I have seen the best minds of my generation, to steal a phrase from the late Allen Ginsberg, driven to heights of self-absorption, advocating policies that assure the failure of the next. Nothing so suggests the failure of my generation — the boomers — than its two representatives running for president.

What Hillary Clinton and Donald Trump reflect are two sides of the same nasty boomer coin.

On one side, there are aging boomers embracing Trump, an icon of materialistic obsession and a lack of concern for “losers.” On the other is a control-freak determination to tell everyone how to live, with instructions coming from entitled boomer politicians and bureaucrats.

Boomers benefited from the strongest economy in American history — they account for 44 percent of the population but 70 percent of the wealth, and have enjoyed far better income growth than later generations. Yet, despite their good fortune, many seem determined to pull ever more out of the economy as they age, while those stuck with the bills for their profligacy and indebtedness — the next generation — will have to do with less.

The ‘I’ve got mine’ crowd

Trumpian boomerism is easily evidenced in my own neighborhood of Villa Park in Orange County. Our lovely, well-maintained and aging little enclave is friendly, civic-minded and civil. But it also is the center of opposition to such things as school bonds that would improve local schools now in a shocking state of disrepair. Villa Park residents helped defeat the last school bond, and it’s a former (thank heaven) City Council member who seeks to lead the effort to overturn the one on the ballot this year.

Read the entire piece at The Orange County Register.

Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, will be published in April by Agate. He is also author of The New Class ConflictThe City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

The Future of Mobility

Fri, 09/02/2016 - 22:38

I was walking home from downtown San Francisco and passed through the South of Market neighborhood. The area is full of tech company offices like Twitter, Uber, and Airbnb. I saw this minivan advertising, “Low Cost Commuting” and “Ride Share” with the Enterprise Rent-A-Car logo and thought hmmmmm.


As I got closer to home in the Mission District I saw this guy signing people up with coupons for free introductory rides. Evidently Enterprise is diversifying its business model. I asked Jim Kumon of the Incremental Development Alliance  about ride share programs and he had this to say.

“Enterprise has neighborhood locations. Because those locations are not in airports, they don’t get hit with all the extra fees that go with ports, so its dirt cheap. Since they have the room to store extra vehicles and they are geographically dispersed in the right places a shared driver carpool can work. Definitely a major tool to make good-enough-urbanism work for post 1970s neighborhoods or hyper dense places where you can functionally have a pickup game in a car every day.”

Back in June I was in Detroit at a strongtowns.org event where I was asked to debate the impact of autonomous vehicles. I predicted that rather than each driver being chauffeured around in a private computer controlled car this new technology would be pressed into service as a form of hybrid mass transit similar to UberPool. Here’s a more complete explanation from a previous blog post.

UTA

I started asking around and was informed by transportation engineer Jon Larsen in Salt Lake City that the Utah Transit Authority has been providing precisely this kind of commuter service for the past fifteen years as part of UTA’s Vanpool program. “[The vans] are owned by UTA, who pays for fuel, maintenance, repairs, etc, and the riders split a per-mile cost. The driver keeps the van at their house. I’ve got a neighbor with a long commute who’s a driver, and he loves it.” There is no central authority that determines the routes or times. The UTA simply provides the equipment and lets riders form their own agendas.
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Salt Lake is a predominantly suburban city where traditional rail and bus transit simply doesn’t work well in many peripheral locations. Self organizing commuter vans achieve all the goals of transit (reduction of highway traffic, cost savings for passengers, minimized fuel consumption, environmental benefits, etc,) in a way that works in a suburban region. The graph above shows that Salt Lake is gradually evolving into a city of resurgent urban neighborhoods that enjoy an excellent light rail system while suburban areas are increasingly accommodated by shared commuter vans. In contrast, city buses are losing market share on both fronts.
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Tech companies may eventually refine this kind of operation with all sorts of bells and whistles, but the folks in Utah demonstrate that nothing more complex than a fleet of existing vehicles, plain vanilla drivers, and a bit of pragmatic self selecting bottom up organization can do all the heavy lifting.

Over the last sixty years we’ve built so much dispersed horizontal development that we’re going to have to continue inhabiting it for a very long time – come what may. Expensive and unwieldy mass transit systems have never worked outside of well established urban centers and their nearby satellite towns. Decentralized, flexible, low tech, and affordable work-arounds just make more sense even if they aren’t as sexy as an Elon Musk electric autonomous vehicle or a bullet train.

One more thing… You will recall that I walked from downtown back home on my journey that uncovered the Enterprise Ride Share plan. My route was just over three miles. In a place like San Francisco it’s actually a pleasure to be on foot and get around with no more advanced technology than shoe leather. We could just build more places like this. Just sayin’.

John Sanphillippo lives in San Francisco and blogs about urbanism, adaptation, and resilience at granolashotgun.com. He's a member of the Congress for New Urbanism, films videos for faircompanies.com, and is a regular contributor to Strongtowns.org. He earns his living by buying, renovating, and renting undervalued properties in places that have good long term prospects. He is a graduate of Rutgers University.

Jerry Brown’s Housing Hypocrisy

Thu, 09/01/2016 - 22:38

Jerry Brown worrying about the California housing crisis is akin to the French policeman played by Claude Rains in “Casablanca” being “shocked, shocked” about gambling at the bar where he himself collects his winnings.

Brown has long been at the forefront on drafting and enforcing regulations that make building housing both difficult and very expensive. And now he has pushed new legislation, which seems certain to be passed by the Legislature and signed by the governor, that makes it worse by imposing even more stringent regulations on greenhouse gas emissions, mandating a 40 percent cut from 1990 levels by 2030.

The press and activists may cheer the new bill, which will require massively expensive and intrusive measures likely to further raise housing costs. A 2012 study by the California Council on Science and Technology found that, given existing and potentially feasible technology, cutting back carbon emissions by 60 percent, roughly comparable with the new legal mandate, would require that “all buildings … either have to be demolished, retrofitted or built new to very high efficiency standards.” Needless to say, this won’t do much for housing affordability.

Brown’s bona fides in promoting housing inflation goes back, at least to his days as attorney general. Throughout his career, Brown has fostered policies that have contributed to the regulatory quagmire largely responsible for helping drive house values in California up more than three times the national rate in the last half century. Over that period, a dense mesh of regional and local regulations have seriously restricted land for urban development, adding significant costs for housing developers.

Some have seen Brown’s recent suggestions to loosen up some regulations and add to housing subsidies as positive, although they have little chance of making it through Sacramento due to environmental, labor and municipal opposition.

Read the entire piece at The Orange County Register.

Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, will be published in April by Agate. He is also author of The New Class ConflictThe City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

The New Culture War Dividing America

Wed, 08/31/2016 - 22:38

The stirring speech made by the openly gay tech billionaire Peter Thiel at the Republican National Convention in Cleveland marked a critical change in the nature of the Culture Wars in the US. Rather than boo him for talking about his sexuality, or using it as a convenient opportunity for indulging in prayer, the sometimes less than gay-friendly GOP greeted his affirmation of his ‘proud’ sexuality with cheers, not jeers.

Thus, in 2016, in Cleveland, died America’s decades-long Culture Wars, which revolved largely around issues such as gay marriage, abortion and prayer in school. Despite his many outrages, Donald Trump, through his identification with figures such as Thiel, has buried the old cultural conservatism, along with its last standard bearer, Texas senator Ted Cruz, whose grandstanding non-endorsement of Trump at the convention may well consign him to the GOP’s fringe.

Trump, or perhaps more accurately his 13million primary voters, has improvised a new right-wing programme that emphasises economic nationalism, nativism and opposition to all things politically correct. Some pockets of the traditional right, horrified by Trump’s open hedonism and lack of grace, will no doubt resist this shift away from piety, but most of Middle America – the vast populace of the ‘flyover’ states, small towns and less-than-tony suburbs – seems to have moved on.

Redefining the Culture Wars into class war

Two developments have driven this change. One is an overall decline of religiosity among America’s working and middle classes. Concentrations of evangelicals in places like Iowa helped Cruz and sustained some of his better showings in the Deep South, but, overall, even in the heart of the so-called Bible Belt, the self-proclaimed prophet of the righteous proved no match for the raw nationalism of Trump.

Despite the hysteria its members evoke among progressives, the religious right has been in, to coin a phrase, secular decline since the year 2000. The legions of evangelicals have stopped growing, even as mainstream Protestants, in particular, have lost ground. The big growth now is among the unaffiliated, whose numbers rose from 37.6million to 57million between 2007 and 2014.

Trump – a thrice-married mainstream Presbyterian with little apparent knowledge of the Bible – benefited from this decline. He was rightly seen by Republican voters as the least religious of the major candidates, yet he outperformed the surgeon Ben Carson and the theocrat Cruz even among evangelicals.

Class seems to have won over piety. The white working and lower-middle classes, the most heavily attracted to Trump’s message, are themselves increasingly irreligious. They are now coping with many of the predicaments – out-of-wedlock births, drug abuse, marginal employment – long endured in minority communities. Of all American groups, they are the ones afflicted both by shorter lifespans and rising rates of suicide. As Pittsburgh psychologist Kenneth Thompson, who treats both white and black working-class patients, puts it: ‘Their social habitat is strained, and the strain is showing up in a looming body count.’

Faced with these grim trends, Middle Americans – particularly in the old factory towns of the Midwest and the Southeast – have stopped looking for God to save their communities. Instead they want someone like Trump, who promises, however cynically, to return good-paying middle-class jobs and block new trade deals. If the labour market can be improved by cutting off the flow of undocumented workers, much of Middle America is more than okay with that.

The war against ‘The Stupid’

Class increasingly defines America’s new Culture Wars, pitting the rising power of well-educated, and self-regarding, supermen (or should I say super-people), against those they regard as less cognitively gifted. This clerisy – the media, academia, the well-funded progressive non-profits – is now waging what the Atlantic recently called ‘a war on stupid people’, which, of course, extends particularly to those who back the loutish Trump. As a group, this educated caste shares increasingly uniformly progressive social views and are almost 50 per cent more likely to be Democrats than Republicans.

There are good reasons for the new cognitive class to like the progressive status quo. Along with the corporate aristocracy who fund the Democratic Party, the hyper-educated have thrived under Obama. In contrast, the bulk of the working and middle class have seen their incomes stagnate or decline.

The new class has little stake in the traditional economy – agribusiness, energy, manufacturing, suburban home-building – that has traditionally provided decent employment to the working and middle classes. Some among them, notably the environmental zealots, even decry rising living standards for ordinary Americans as the primary threat to the environment. The entire progressive agenda increasingly constitutes an attempt to drive poverty out of the centre of cities and into the middle class. And in Trumpian fashion, they want to make the middle class, with their tax dollars, pay for the privilege.

Race, national identity and the American future

Trump’s emergence has benefited from worsening race relations, as sadly demonstrated in the recent rash of cop killings. The terrorist attacks mounted primarily by young Muslims both here and in Europe, and a rise in violent crime, have contributed to the Trump campaign and could still make his victory, however unlikely, possible.

The mass migration of largely undocumented poor people from developing countries – mainly Mexico and Latin America – is also less than welcomed by working- and middle-class people, who not only have to accommodate the newcomers in their schools and neighbourhoods, but must also compete with them for jobs. In contrast, the upper classes in tony suburbs or prime urban districts see immigration as all good – it supplies them with cheap household labour, better restaurants and it injects some ‘colour’ into otherwise predictably dull commercial districts.

Nor has the progressive left done much to promote tolerance. The very premise of movements like Black Lives Matter implies that other lives, including those of police, are less important. The overwhelming white cognitive elite dismisses the legitimate concerns of the white working class and sees only unreconstructed racism.

This contempt spills into a growing dispute about the validity of America’s traditional culture. Now denounced for its past racism, it is rarely celebrated for its continuing success at integration. Globalist progressivism is so deeply entrenched in blue lagoons like Silicon Valley, it’s doubtful the oligarchs in charge even notice. Google, for example, recently celebrated the life of the radical pro-Bin Laden activist Yuri Kochiyama, but saw fit to ignore the anniversary of D-Day. Facebook and Twitter now increasingly curate the news like 19th-century Boston Brahmins, usually with a decidedly progressive bias.

Populism after Trump

In his Cleveland speech, Thiel pointed to what should really matter – issues of community, of economic opportunity and, yes, pride in being a citizen of the most powerful republic in world history. Many in Silicon Valley and the media prefer that the big issues are those of gender, race and sexual preference. But Thiel rightly consigned them to secondary importance, saying: ‘Now we are told that the great debate is about who gets to use which bathroom. This is a distraction from our real problems. Who cares?’

Trump sees this, too. He, at the very least, talks about sparking economic growth, which is a precursor to upward mobility. In contrast, the contemporary Democratic Party, notes former Bill Clinton adviser Bill Galston, now displays ‘near-silence on economic growth’.

Some right-wingers believe that Trump can win the presidency purely as the candidate of resentment. But his stridency, racial innuendos, lack of respect for basic decencies, and often unsupported claims are more likely to alienate voters – particularly suburbanites and middle-class minorities, who might have otherwise rallied to his standard.

Given its almost lock-step media backing, support from oligarchs everywhere, and Trump’s self-destructive lack of self-control, the Democratic establishment will likely prevail at the election. And it will use this as a perfect opportunity to turn more Americans into effective wards of the state. It will finance its agenda at the cost of the middle class while the hedge funders, tech oligarchs and real-estate speculators continue to feed at the trough.

However, the forces stirred up and tapped by Trump will not go away anytime soon, even if he loses. What the rebellion now needs, more than anything, is a messenger like Ronald Reagan in 1980, who appealed to earlier resentments but with a fierce sense of discipline and decorum. Some day, the swagger, arrogance and manipulation of the united ruling classes may have to confront a messenger who, unlike Trump, can make a more convincing case against them. Those who laugh today at Trump and his ‘stupid’ supporters may not be so jocular that day.

This piece first appeared at Spiked Online.

Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, will be published in April by Agate. He is also author of The New Class ConflictThe City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Trump rally photo by Marc Nozell [CC BY 2.0], via Wikimedia Commons

Asia Dominates Largest World Seaports

Tue, 08/30/2016 - 07:02

The Port of Shanghai is by far the largest seaport in the world, according to the authoritative 2014 figures published by the American Association of Port Authorities. AAPA is an "alliance of the ports of Canada, the Caribbean, Latin America and the United States."

Ranking seaports is no simple matter. There are two fundamental rankings, Cargo tonnage and containers. Containers are measured in "20 foot equivalent units," or TEU's. Cargo tonnage, for example, includes bulk commodities, such as copper or oil. Cargo tonnage is unloaded at ship side and transferred to another mode of transport (such as freight rail or truck) to continue toward its destination. Containers are intermodal, meaning that they can be directly transferred from the ship to other modes of transport without being emptied.

Shanghai leads the world in both cargo tonnage and container volume. This supremacy was achieved only recently. Singapore had been the premier world port in both tonnage and containers during the much of the 2000s. Shanghai became dominant in cargo in the middle 2000's and overtook Singapore in containers by 2010.

Container Volumes

All of the largest container ports are in Asia with Rotterdam being the largest non-Asian port at number 11. Seven of the top 10 are in China.

Top ranking Shanghai handles more than 36 million TEUs annually. The port of Shanghai includes facilities on the Huangpu River (Graphic 1), which flows through the city and the Bund, the Yangtze River and the new offshore Yangshan Deepwater port in the mouth of Hangzhou Bay (Photo above). This facility was opened in the middle 2000's for container traffic and is connected to the mainland by the 33 kilometer (20 mile) long Donghai bridge.

Singapore is the second largest container port, handling nearly 34 million TEUs (Graphic 2). Shenzhen, just across the border from Hong Kong is the world’s third largest port, well behind Singapore, with 24 million TEUs. Hong Kong ranks fifth, and was the largest in the container port in the world until displaced by Singapore in the early 2000's (Graphic 3).

Ningbo, less than 80 kilometers (50 miles ) across Hangzhou Bay from the port of Shanghai is the world's fifth largest container port.

Busan, in South Korea ranks sixth. Qingdao, on China's Shandong peninsula is the seventh largest (Graphic 4). Guangzhou ranks 8th (Graphic 5) and Dubai ranks 9th. Tianjin, located in China's fourth largest urban area, is approximately 160 kilometers (100 miles) from Beijing.

Graphic 6 shows the 10 largest container points in the world and selected additional ports.











Cargo Volumes

Twelve of the largest cargo ports in the world are in Asia, with the exception of Port Hedland, in the state of Western Australia's resource-rich Pilbara region. This is the  largest non-Asian port (#5). Eight of the top 12 ports are in China.

In 2014, the port of Shanghai handled approximately 680 million tons of cargo (Note). Singapore was ranked second with approximately 580 million tons. Guangzhou and Qingdao were the third and fourth largest cargo ports. Port Hedland, was the fifth largest cargo port. Three of the second five were located in China, including #6 Tianjin, #8 Ningbo and #9 Dalian (Graphic 7), Manchuria's largest cargo port.

Rotterdam was the seventh largest cargo port and the largest port in Europe, though had dropped from being the largest in the early 2000's, before it was overtaken by Singapore. Busan was the 10th largest cargo port.

Graphic 8  shows the 10 largest cargo points in the world and selected additional ports.



Large Port Regions

China, with most of the world's largest ports has considerable regional port concentrations. The two Yangtze Delta ports (Shanghai and Ningbo) had approximately 1.1 billion tons of cargo and 52 million TEU's. The Pearl River Delta ports (Guangzhou, Hong Kong and Shenzhen) handle nearly 1.0 million tons of cargo and 57 million TEU's. The Bohai Bay ports (Tianjin and Qinhuangdao), to the east of Beijing account for more than 700 million annual tons of cargo and a much more modest 14 million TEUs.

The adjacent Los Angeles and Long Beach ports also handled 14 million TEU's in 2014. The Tokyo Bay ports (Tokyo, Yokohama and Chiba) processed 7 million TEU's while the port of New York and New Jersey handled 6 million.

Other large regional cargo port concentrations lie along Louisiana's lower Mississippi River (the ports of South Louisiana, New Orleans, Baton Rouge and Plaquemines), with cargo tonnage of 430 million, The Tokyo Bay ports handle 370 million tons annually. The adjacent ports of Los Angeles and Long Beach process 130 million tons of cargo annually. Historically prominent ports, such as New York and London have smaller volumes (115 million and 45 million respectively).

The Ascendance of Asia

The big story in port statistics is the ascendance of Asia, especially China. It was not a long time ago that European ports were the largest. Recently published research indicates that Asian container shipments between China and Europe/North America  in 2012 were five times their 1990 rate. This compares to an approximate doubling between Europe and North America over the period. The result is that European and North American ports no longer dominate the statistics.

In 2014, East Asia accounted for 60 percent of the container volume among the 100 largest ports. This is four times the volume of European ports (14 percent) and six times that of North American ports. All of the rest of the world accounts for only 16 percent of the total (Graphic 9).

The distribution of cargo traffic is similar. East Asia accounts for 56 percent of the top 100 port volume, four times the volume of Europe (14 percent) and five times that of North America (11 percent). Australia accounts for 8 percent, 60 percent of which is attributable to the Western Australian terminals of Port Hedland and Dampier, with their substantial commodity shipments to China. The rest of the world accounts for 11 percent of volumes (Graphic 10).



The world of ports is by no means static. With the expanded Panama Canal now in operation, the maximum capacity of container ships has been nearly tripled. This means that US Gulf of Mexico and Atlantic ports are more competitively positioned by being able to berth the larger ships originating from Asia. This permits substitution, for example, of longer and less costly ocean voyages for intermodal truck and rail shipment across the United States,

According to China DailyMaersk, the largest container ship company in the world, is routing its Asia to US East Coast traffic through the Panama Canal. A Maersk press release said ”Using the new Panama Canal locks, Maersk Line is able to significantly reduce the transit days from Asian to North American ports. The transit times from Shanghai and Ningbo to Newark, Norfolk and Baltimore are now five to 10 days faster,." James Newsome of the South Carolina Ports Authority described to China Daily the economics that now favor Atlantic ports: "...if Asian cargo bound for Charlotte, North Carolina, landed in Los Angeles, it would cost $2,000 to send it across the US by rail. If it landed in Charleston, it would cost only $600 by truck."

Gulf of Mexico ports as US shippers become more competitive from lower costs. A natural gas shipment from the Gulf Coast would save 5,000 nautical miles (5,750 miles) and nine days using the canal, according to Martin Houston of Tellurian Investments.

A number of Gulf and Atlantic ports are investing in improved infrastructure to accommodate the new traffic and larger ships. This includes ports like Houston, Savannah, Charleston (South Carolina), Miami and others. Perhaps the most impressive investment is raising the historic Bayonne Bridge so that the Port of New York and New Jersey can accommodate the larger ships.

Of course the winners in this changing world will be consumers, who can expect lower prices as shipping becomes less expensive.

Note: AAPA urges caution in interpreting cargo tonnage figures, because of differing tonnage definitions.

Wendell Cox is principal of Demographia, an international pubilc policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Photo: Yanghsan Intermodal Port, Shanghai (All photos by author)

How the Middle Class Lost the Election

Sun, 08/28/2016 - 22:38

Middle-class rage has dominated this election, but ultimately 2016 seems destined to produce not a populist victory but the triumph of oligarchy. Blame goes to a large section of the middle and working class itself, which, in rejecting political convention, ended up with a candidate who never would have served their interests. You can blame “elites” all you want, but in a republic, citizens need to act responsibly. And choosing Donald Trump doesn’t fit that description.

 Middle-class revulsion with the political mainstream has been driven by slow economic growthstagnant wages, a dysfunctional education system, and, for smaller businesses, a tightening regulatory regime. Homeownership is now at a nearly half-century low. New business start-ups, for the first time in three decades, are not keeping up with the number of deaths. Both stats reveal a real decline in aspiration. Most Americans, in a stunning reversal of past trends, see a worse future for their offspring than themselves. Who can blame them? Middle-class breadwinners and working-class wage-earners now suffer from deteriorating health and shorter lifespans.

In other words, middle-class Americans could certainly use a champion. But those who chose Trump went off the rails.

Trump’s landmark professional achievement has been in catering to the luxury market while building casinos that empty the pockets of people who often cannot afford the losses. The average price of a condo in Trump Tower in New York, the Donald’s signature property, rests around a median of $5 million.

A Trump administration would be unlikely to reflect blue-collar interests, but rather those of his inner circle, which includes some of the most ravenous Wall Street operators. The same is true of his general election opponent.

Hillary Clinton: Matriarch of Oligarchy 

By elevating this disingenuous demagogue, Trump voters have assisted in the further ascendency of the oligarch class. The forces coalescing around Hillary Clinton -- mainstream Wall Street, particularly hedge fundsbeltway lobbyists, the big media, Silicon Valley, Hollywood, and green capitalists  -- do not share the priorities of Middle America. Bernie Sanders made an issue of Clinton’s Wall Street support, but the Vermont socialist was always too marginal, cranky and, ultimately, too doctrinaire to win even in today’s Democratic Party.

With Sanders conveniently dispatched, the crony-capitalist class is assured its worldview prevails. They can check all the boxes that Rob Atkinson has labeled as “the Davos application” of open immigration, greater globalization, free trade, and higher carbon prices.

With Trumpian nationalism dispatched, these globalists will be able to continue preening as noble post-national “citizens of the world.” Walter Russel Mead describes them as a “soul-sick leadership elite” that serves their class interests, but hardly those of their fellow citizens.

These constituencies all have benefited from the Obama economy, with its slow growth and rapid asset inflation driven by cheap money. They can expect a continued positive relationship with Washington. The Clintonite core includes some of the world’s most adept tax-dodgers -- Amazon, Apple and Google -- who certainly do not want their special breaks reduced even if middle-income earners get hammered.

Clinton seems certain to continue Obama’s policy of not subjecting the tech oligarchs to the anti-trust investigations that bedevil other industries. No surprise that many suspect that the new media moguls of Silicon Valley, along with the residue of the old mainstream media, are waging a multi-front campaign to tear down Trump to the benefit of their more reliable ally.

The populists seem certain to have created their own worst nightmare. Under Hillary, industries such as fossil fuel energy, manufacturing, warehousing and agriculture, all of which employ many middle- and working-class people in large swaths of the American heartland, will see more regulation, and layoffs -- not only among coal miners but in a broad array of primarily blue-collar industries. In contrast “green” corporatists like Elon Musk and Tom Steyer  know that by helping to fund the Clinton machine, they can look forward to continued government subsidies.

Also primed for a reaming will be middle-class suburban voters, the geographic core  of the GOP. Many suburbanites are understandably turned off by Trump’s nativist and sexist braggadocio and may be now tilting towards Clinton.

Yet they too will get their comeuppance when the Clintons return to the White House. Like President Obama, her urban policy will be city-centric, and negative towards the needs of the suburbs, where the vast majority of the population resides. Following the Obama lead, HUD will likely impose new regulations forcing middle-income communities to accept large numbers of poor people, effectively undermining local public schools and property values. 

It’s not inconceivable that the EPA, following the environmental agenda perfected in California, will impose policies designed to reengineer suburbs into dense cities  that correlate to a lower standard of living. These rules, of course, will not impact their progressive betters -- from movie stars to corporate executives -- who will continue to live large while hectoring the hoi polloi to reduce their “footprint.”

The Real Battle: 2018

The upshot is that in the 2016 election cycle, populism first rose and then proceeded to consume itself. Even if Trump wins, he’ll will prove to be the insider New York businessman he always has been, and will likely do more good for the ultra-rich than the middle class. But most likely we will see the triumph of Hillary’s oligarchs, whose agenda will begin to impinge more seriously on the middle class and its way of life.

Moreover, Trump’s negative coattails could put Democrats  back in control of the Senate, which translates to shaping the Supreme Court for a generation. Obama’s penchant for rule by decree will now grow without limit. Every community, every school, every business will fall ever more under the watchful eyes of the federal regime. Pain already evident in Appalachia will spread to the industrial sector, agribusiness, and, most of all, energy as Washington seeks to “save” the planet in ways that don’t threaten the profits of its oligarchic allies.

Fortunately, we will still have elections, and 2018 could be decisive. Given the still weak state of the economy,   and the lack of tools to meet a downturn given consistent low interest rates, the country should be ready for a change. Unlike 2016, most of the vulnerable Senate seats will be held by Democrats, and 12 years of meager or no growth, and slumping productivity, do not augur well for them.

The question is whether opposition to Clinton will be fundamentally populist in nature. If Trump loses by a large margin there will be calls to resurrect the GOP policies  on trade, immigration and “enrich the rich” taxation schemes that have proven consistently unable to spark either sustained growth or upward mobility.

This approach will further alienate Trump voters, not to mention those who supported Sanders. These disillusioned voters -- mostly, but not entirely, white -- have already rejected the GOP’s country club agenda. An opposition that can incorporate some Trumpian themes, notably economic nationalism and control of immigration, without embracing his clear incompetence, narcissism and mean-spiritedness, could harness the populist wave.

To succeed, the new populism has to extend itself beyond angry, aging middle-class whites. In 2018, the real struggle will be to attract increasingly diverse suburban voters who naturally seek to protect what they have from the central bureaucracy. Latino and African-American families now ensconced in a comfortable, safe suburbs with good public schools may not appreciate a political party that wants to turn their neighborhood into the very one they escaped.

The great middle-class rebellion will not end with Donald Trump, or the putting away of Bernie Sanders. There is far too much disillusionment, and far too little prospect for upward mobility, to prevent grassroots anger from spilling over again. The question will be which party -- or some new party -- will ride that prairie fire to its logical extension.

This piece first appeared at Real Clear Politics.

Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, will be published in April by Agate. He is also author of The New Class ConflictThe City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Photo by Gage Skidmore from Peoria, AZ, United States of America (Donald Trump) [CC BY-SA 2.0], via Wikimedia Commons

Culture, Circumstance, and Agency: Reflections on Hillbilly Elegy

Fri, 08/26/2016 - 22:38

The intractability of poverty has been recognized since at least the time the Deuteronomist wrote, “The poor will never cease to be in the land.” Explanations vary: ill favor of the gods, deficient natural endowments, personal defects, the culture of the poor, external circumstances such as a lack of economic opportunity, some type of oppression—all have been popular options.

In his bestselling new memoir Hillbilly Elegy, J.D. Vance takes a blended view, recognizing the role of economic and personal circumstances in poverty and life dysfunction but also stressing the way that the culture of his own working-class Appalachian tribe has crippled its response to life’s challenges. He comes down firmly on the side of individual agency and the ability of people to overcome obstacles through hard work and adopting the cultural habits of successful groups. He writes, “This book is about something else: what goes on in the lives of real people when the industrial economy goes south. It’s about reacting to bad circumstances in the worst way possible. It’s about a culture that encourages social decay instead of counteracting it.” And: “The truth is hard, and the hardest truths for hill people are the ones they must tell about themselves.”

Vance’s book has hit a nerve by providing a compelling lens through which those appalled by the popularity of Donald Trump in working-class circles can understand his improbable rise. Who are these Trump voters? Hillbilly Elegyoffers an answer.

Vance is a 31-year-old graduate from Yale Law School. Happily married to his wife Usha, whom he met there, he appears to be the perfect embodiment of upper-middle-class success. As it happens, though, he started out in the world of the deeply troubled working class. Vance was raised in Middletown, Ohio, today part of suburban Cincinnati, but his heritage is Appalachian Scots-Irish, and his family originated in Breathitt County, Kentucky—so-called Bloody Breathitt for its history of violent feuds and its military tradition—and is related to the Hatfields of Hatfield-McCoy feud fame. So he really is a legitimate hillbilly, not a pretender.

It’s ordinarily presumptuous for a 31-year-old to write a memoir, but Hillbilly Elegy justifies the exception. Vance provides an honest and powerful account of his toxic upbringing and the long history of Appalachian dysfunction that produced it. His book also positions Vance, a conservative who has contributed to National Review and describes former Indiana governor Mitch Daniels as his “political hero,” as a potential post-Trumpian political figure. In that respect,Hillbilly Elegy is perhaps an aspirational analogue of Dreams From My Father. Vance’s story forms a bridge between the upper middle class, whose values he fully embraces, and the alienated white working class, with which he still claims tribal identity.

Papaw and Mamaw, Vance’s maternal grandparents, moved to Ohio as teenagers after a pregnancy and shotgun wedding. Papaw got a good union job at Armco Steel, and the family was in theory financially prosperous and upwardly mobile. But the problems of Appalachia followed them to Ohio. They were poor money managers, with Papaw buying new cars on impulse. He was also a violent drunkard. Mamaw, with her own reputation for violence, once threatened to kill him if he ever came home drunk again, and, after he promptly transgressed, doused him with gasoline and set him on fire (he survived with only minor burns). At times she was a hoarder. Papaw and Mamaw ultimately separated but remained close.

Their behavior came in part from the values they brought with them and in part from the many Appalachians who followed them along the “Hillbilly Highway” north, looking for work in booming Midwest factories. Though this migration has since radically slowed, cities like Indianapolis retain Appalachian “immigrant” neighborhoods today, some still being restocked with new arrivals.

Vance’s mother Bev fared much worse than her parents, unable to maintain even the semblance of a steady romantic relationship. Vance barely knew his biological father until he was 12. He was adopted by one of his mother’s many husbands, but that fatherly bond proved no more durable than the biological one. He told conservative writer Rod Dreher that his mother had 15 husbands and boyfriends. None of his many brothers and sisters was full-blooded. Indeed, Vance’s family relationships boggle the mind:

One of the questions I loathed, and that adults always asked, was whether I had any brothers or sisters. When you’re a kid, you can’t wave your hand, say, “It’s complicated,” and move on. And unless you’re a particularly capable sociopath, dishonesty can only take you so far. So, for a time, I dutifully answered, walking people through the tangled web of familial relationships that I’d grown accustomed to. I had a biological half brother and half sister whom I never saw because my biological father had given me up for adoption. I had many stepbrothers and stepsisters by one measure, but only two if you limited the tally to the offspring of Mom’s husband of the moment. Then there was my biological dad’s wife, and she had at least one kid, so maybe I should count him, too. Sometimes I’d wax philosophical about the meaning of the word “sibling”: Are the children of your mom’s previous husbands still related to you? If so, what about the future children of your mom’s previous husbands? By some metrics, I probably had about a dozen stepsiblings.

Only his older half-sister Lindsay was a consistent presence. He cried when he learned that she was not his full sister.

Bev continued to spiral downward, attempting suicide at least once, becoming abusive toward Vance, and ultimately falling into severe drug addiction. Vance shuttled between homes, sometimes with his mother, sometimes with his Mamaw, whom he credits as a positive influence. In an underexplored episode of his life, Vance meets and for a time lives with his biological father, who has embraced Pentecostal Christianity and turned his life around. “Dad had built a home with an almost jarring serenity,” Vance writes. “In some ways, I loved living with Dad. His life was normal in precisely the way I’d always wanted mine to be.” He prefers his Mamaw’s folk theology to his father’s intense religion, but recognizes the role that the latter, extreme though he perceives it to be, played in improving his father’s life.

Yet he never feels fully comfortable living with his father. When Mamaw calls and asks him to move back, he abandons this healthy home to return to his previous life of chaos. Throughout the book, Vance displays an obvious and strong matriarchal orientation. He’s emotionally bonded to his deeply flawed Mamaw, whose family name he and his wife adopt when they marry. He idealizes his sister Lindsay and his wife Usha. But he seems unwilling to reflect on this female dependency or understand how it shaped decisions like leaving his father.

Things get better for Vance later in high school, in part because he lives full-time with his Mamaw instead of shuttling back and forth between her and his drug-addicted mother’s various abodes. After graduation, he thinks seriously about going to college. Lacking the funds and recognizing he wasn’t ready, he wisely enlists in the Marines, which proves a transformative experience. Newly fashioned into a stable, functioning adult courtesy of the Corps, Vance enrolls in Ohio State, where he excels while working two or three jobs simultaneously to avoid taking on debt.

He then applies to and is accepted at Yale Law School, where the cultural gulf between his hillbilly upbringing and the American elite first comes into full relief. He discovers the role that social capital, mentors, and connections play in success. One of his professors at Yale, Amy Chua, of Tiger Mom fame, becomes a key advisor and advocate for him. He struggles in settings upper middle-class students would navigate with ease. He spits out sparkling water in disgust and surprise the first time he drinks it. When a law firm takes him to an upscale restaurant for dinner, he has to call Usha, then his girlfriend, to ask how to use the silverware. At Yale, he discovers that he must not just reject the toxic elements of his old culture but also embrace this new one to get anywhere.

The social deficiencies of the working class are under-appreciated by those who never suffered them. I also came from a working-class background. After flying to a job interview in Chicago in college, I didn’t know how to take a taxi and was too ashamed to ask. I tried getting in a cab dropping off passengers; the driver was kind enough to tell me where the cabstand was without humiliating me. I didn’t know how to use chopsticks. I didn’t know the way much of the professional world functioned. And a lot of those things I didn’t know that I didn’t know. I estimate that I started out five to ten years behind those who came from upper middle-class homes in important ways. I’ve heard the same from others of similar origins.

E.D. Hirsch talks about the “core knowledge” every kid must learn. For those with above-average intelligence, knowledge is relatively easy to acquire if you don’t have it. But there’s also a set of core social knowledge and experiences needed to function effectively in educated society. This can be more challenging to obtain, especially without a mentor. Vance illuminates this oft-overlooked aspect of upward mobility.

Hillbilly Elegy has received nearly universal praise on both the left and right, much of it well-deserved. Though Vance may be a conservative, his book has something for everyone.

For the Right, Vance questions the efficacy of war-on-poverty solutions, which he sees as enabling the worst aspects of Appalachian culture. Upscale liberals find it difficult to comprehend why the white working class often despises the welfare programs from which their own communities would purportedly benefit. Vance helps them understand this rejection by describing the challenges of working-class life and how working-class communities can be easily undermined by government benefits. He worked for a time in a tile warehouse, earning $13 an hour for physically demanding labor. That’s a viable if modest living in a low-cost town, but it’s hard to motivate oneself to take such a backbreaking but low-wage job if benefits, even if less in cash value, can be had without working at all.

Another aspect of the book that appeals to non-Trumpian conservatives is also what powerfully attracts it to the Left: its placing of the locus of responsibility for white working-class malaise in its own culture. Intellectuals on the left and right have been aghast at support for Trump from the white working class. Vance tells them what they want to hear: that the travails of this class stem in large part from their dysfunctional and self-destructive culture. Vance acknowledges that the white working class faces legitimate hurdles, such as the decline of union manufacturing jobs, an analysis that resonates with the Left. But ultimately he sees this demographic’s failure to overcome obstacles—as he did, and as President Obama, one of his examples, also did—as stemming from personal and cultural flaws, notably a lack of a sense of agency:

Too many young men immune to hard work. Good jobs impossible to fill for any length of time. And a young man with every reason to work—a wife-to-be to support and a baby on the way—carelessly tossing aside a good job with excellent health insurance. More troublingly, when it was all over, he thought something had been done to him. There is a lack of agency here—a feeling that you have little control over your life and a willingness to blame everyone but yourself.

Rather than seeing the working class as victims of, say, current economic policies, which would require addressing underlying structural inequities, Vance says that these people are in large part the authors of their own demise. Their predicament thus requires no fundamental change of course economically—a great relief to those prospering under the current regime. This flattering of audience sensibilities, combined with Vance’s immensely compelling life story, helps explain why Hillbilly Elegy has received so much praise and so little substantive criticism, despite some limitations.

As someone who came of age 15 years before Vance, in a very different white working-class milieu, I see problems in the book that deserve more attention. The most significant is Vance’s conflating of his Appalachian Scots-Irish hillbilly world with the white working class generally. Appalachia has been a byword for poverty and dysfunction for generations. Vance’s culture has no living memory of anything else, so it’s natural for him to see the culture of his people as overwhelmingly influential in their fate. But this is not the case for the majority of the white working class. For example, sociologist Robert Putnam had a different experience in his hometown of Port Clinton, Ohio. The Port Clinton of his 1950s upbringing, as related in his book Our Kids, certainly had its share of working class poverty, but it was socially intact and functional—a world away from that experienced by Vance’s family.

I grew up in white, working-class, rural Southern Indiana during the 1970s and 1980s. While it had some Appalachian cultural influence, its demographic and social conditions were different. German was the dominant ethnic background of the area. My family is of mostly German Catholic stock, with one Sicilian grandfather added to the mix. My recently divorced mother, brother, and I moved to Harrison County in 1976, when I was seven. We lived in a trailer on a gravel road. We soon built a house, but our water came from a cistern, we had a party-line telephone, and we burned our trash in a 55-gallon drum. I was a classic case of “poor but didn’t know it.” There was certainly a lot of poverty around. Yet I, too, recall a functional and socially intact, if hardly idyllic, community.

Today, however, both Putnam’s Port Clinton and my Southern Indiana are a lot more like Vance’s Appalachian world than Putnam or I would have believed possible, even after allowing for nostalgia. We face a different question from the ones that confront Vance. We must ask what changed in only a generation or two to damage communities that once did broadly sustain healthy working-class marriages, families, and community life. It’s harder to blame culture entirely here when that same culture was producing respectable if unglamorous success as recently as 30 years ago.

Some answers are easy. Hard drugs are available now in a way they weren’t before. Working-class communities were almost always hard-drinking ones. But the potential for destruction has been greatly magnified by meth, heroin, and prescription opioids—dangers that Putnam and I never had to face growing up. These drugs are devastating many working-class communities today.

Other answers require facing up to unpleasant truths. For the Right, that means acknowledging that the economy has changed in ways that have badly disadvantaged the working class, offering lower pay and less job security than the solid base of union manufacturing jobs that previously anchored these communities. “Creative destruction” is not so great when you’re on the receiving end of the destruction, and when it’s human lives rather than widgets or corporate profits at stake. The scope of this displacement has been far larger than originally anticipated, with the prospect of more to come, thanks to rapidly advancing technology. Trade deals and tax cuts won’t fix the problem.

For the Left, the unpleasant truth is what Vance makes clear if not explicit: the sexual revolution has been a disaster for the working class. No-fault divorce and the diminishment of the stigmas attached to casual sex and single or divorced motherhood have been a liberating dream—or at least a manageable reality—for educated urbanites. But these changes have been a nightmare for the children growing up in a white working-class world, where broken homes and a string of romantic and sexual partners for Mom is the new normal. “Of all the things that I hated about my childhood,” Vance writes, “nothing compared to the revolving door of father figures.”

My own childhood was an early harbinger of bad things to come. I was a child of the first generation of no-fault divorce. But both sets of my grandparents were in lifelong marriages, and my community was mostly shaped by a culture of intact homes. My mother’s Pentecostal faith—similar to that of Vance’s father—shaped her conservative behavior with men after her divorce; I was spared the revolving door of boyfriends that Vance had to endure. Without these advantages, who knows where I would have wound up?

Today, after 40 more years of broken marriages and out-of-wedlock births, far fewer people in my hometown come from intact families. I now see grandmothers, even great-grandmothers, sometimes single and, like Vance’s Mamaw, belatedly trying to make up for major life problems they themselves only recently emerged from, raising children of drug-addicted mothers. There remain some successful, intact families back home, but this new reality exerts a powerful influence on the local culture.

Vance overcame his domestic instability. Many others don’t. Harvard economist Raj Chetty found that when it comes to explaining the variance in upward social mobility across so-called commuting zones, “the strongest and most robust predictor is the fraction of children with single parents.” That observation is likely to prove about as popular among liberals as the Moynihan Report.

By Vance’s own account, the confidence, discipline, and work ethic he acquired in the Marine Corps enabled him to overcome a difficult background. But the Marines don’t instill order into the disordered lives of recruits by inspiration or encouragement; they impose it by force. Historically, de facto legal and social controls limited personally and socially destructive choices in many working-class communities (if not Appalachian ones). These norms were undoubtedly repressive and often cruel, but so are drill sergeants. The elimination of these norms—at the behest of the educated, not working, classes—has corrosively undermined the supports that once sustained functional working class communities, particularly when combined with the rise in college attendance that has sucked out the most talented, like Vance, and routed them to metro or neighborhood enclaves of the similarly successful. (Vance currently lives in San Francisco.)  

The major form of social control that we have retained with full vigor is the criminal justice system. So today, problems previously handled through other means now fall into the lap of police and judges, with predictable challenges. We have continued to use traditional social-control mechanisms for some purposes: promulgating gay rights, reducing the use of the Confederate flag, and so on. Until we’re willing to re-embrace similar means to restore a semblance of family stability in poor and working-class communities—white or otherwise—too many children will never stand a chance.

Vance also lacks self-awareness in some areas, especially in his rejection of the idea that talent—that is to say, good fortune—played a major role in his success. He instead attributes it to the character and work ethic he developed in the Marines, and explicitly rejects innate talent as a factor. “Today people look at me, at my job and my Ivy League credentials, and assume that I’m some sort of genius, that only a truly extraordinary person could have made it to where I am today,” he writes. “With all due respect to those people, I think that theory is a load of bullshit.”

But undoubtedly Vance won the genetic lottery for IQ. He got into Yale Law School. Based on the LSAT scores needed for admission there, his IQ is likely north of 140—probably genius-level. No wonder he didn’t think that the people there were any smarter than he was. No amount of hard work can substitute for this. Untold numbers of people have worked extraordinarily hard and yet failed to gain admission to the Ivy League.

Vance even concedes his good intelligence genes. His mother was also the salutatorian of her high school. “Mom was, everyone told me, the smartest person they knew,” he writes. “And I believed it. She was definitely the smartest person I knew.” He describes his cousin Amber as an “academic star” and tells legends of his Uncle Jimmy’s precociousness. But he doesn’t connect the dots.

That’s not to say that his hard work was irrelevant or unimportant. I, too, went to a Big Ten state school, in my case Indiana University. Yet unlike Vance, who emerged from the Marine Corps driven and focused, I initially drifted through life, taking what success offered without much effort, though I was valedictorian of my high school and had a successful corporate consulting career. But while it’s purely speculative as to whether I could have gotten into Yale Law, it’s indisputable that I underperformed my potential, because I was lazy. Vance’s hard work was important, then, but the idea that he could have gone to Yale Law without unearned, innate intellectual talents is highly dubious.

Thus, Vance falls into the trap of too many of today’s winners in a “meritocratic” (his term) system: he believes, in effect, that he morally merits his outsize success because he earned it through hard work. This is the flip side of his cultural condemnation. He understands that he benefitted from encouragement from Mamaw and others, which many kids in his milieu don’t receive: “Whatever talents I have, I almost squandered until a handful of loving people rescued me.” But he fails to recognize the role that unearned merit, in the form of those talent endowments, played in his success. This position is deeply unfair to the half of the population with below-average intelligence—tens of millions of them with significantly below-average intelligence—in a knowledge economy that greatly privileges brainpower over brawn. Someone born into a poor, chaotic community with an IQ below 100 can’t just solve his problems by bootstrapping himself into Yale, not even after a tour in the Marines.

Hillbilly Elegy nevertheless remains remarkable for its first-person portrayal of Appalachian culture from someone who has affection for its people—indeed, still sees them as his people—but also the courage to admit its flaws. The larger problems come less from the book itself than from the way in which educated readers have seized on it to confirm their own negative impressions of the white working class—and, by extension, to flatter the superiority of their own cultural values and their sense of moral entitlement to the success they enjoy.

At the heart of the matter, Vance is right. It’s not a question of either circumstances or culture, but “both-and.” The poor and working class do face challenging, sometimes horrific circumstances. They also have agency in choosing how to respond. Too often, their culture produces bad responses, even when the opportunity exists to choose otherwise. This culture itself may be an inheritance that individuals did not choose. But people can have disabilities for which they are not to blame. That doesn’t change their real-world effect. Unless both the external circumstances and the culture of the working class, of all races, are ameliorated, broad-based change is unlikely.

This piece was originally published by the City Journal.

Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

Lead photo courtesy of The City Journal.

The Perils of Public Capital

Thu, 08/25/2016 - 22:38

Most discussions of our slow economic growth includes a seemingly compulsory demand for increased public capital spending, so-called infrastructure spending or simply “roads and bridges.”  Both Donald Trump and Hillary Clinton promise increased public capital spending on their websites.   Larry Summers made perhaps the best case for public spending when he claimed that our failure to invest in public capital creates the “worst and most toxic debts.”

I’m not buying it.

Interest rates are low as is investment, by all types of entities.  This implies that the return on investments is low.  Why should government investments be any different?

There are many reasons to believe that government investment provides a low return in the best of times.  Government investment decisions are the outcome of a political process.  One result of the political process is that one senator’s low-return project is funded in order to obtain concurrence for funding another senator’s high-return project. 

The Bridge to Nowhere is an excellent example of the political process forcing low-return investments.  Fortunately, that project was abandoned due to widespread ridicule, but just as worthless projects are funded.  I just Googled “wasteful government projects” and had 538,000 results in 0.45 seconds.  You find things like spending hundreds of thousands of dollars on running shrimp and mountain lions on treadmills, $387,000 for Swedish massages for rabbits, and $18 million to renovate the airport for Sun Valley Ski Resort’s airport, and $800,000 to develop a food-fight video game.  These are hardly our most pressing issues.    

The existence of low-return projects leads to a higher required return on the profitable projects in order for the average project to be profitable.

Then, there is the problem of fads.  Governments tend to make popular investments and popular doesn’t mean profitable.  After the success of the Erie Canal in 1825, other states started building canals.  Eventually eight states defaulted on their debt because of those canals.

More recently, Californians voted in 2004 to provide $3 billion they didn’t have to support stem cell research that private industry was already pursuing. 

Government investment may be appropriate for projects where the return can’t be realized by the investor, or for investments that private firms won’t make because they lack information.  Neither condition applied to the stem cell research.  Stem cell research’s potential was a well-discussed topic in 2004.  The many private firms that are investing in stem cell research will have no problem capturing the returns.

Any project well known enough to carry an election fails to meet the second condition for government investment.  If it’s well known enough to carry an election, private firms know all about it.

Government projects have other costs because of the approval process.  These include the costs of lobbying, selling the project to the public, and sometimes elections.  These costs, and the uncertainty associated with them, increase the required return for profitability.  It may be that costs of approval are so high that a net-positive return is impossible.

Consider harbor expansion.  California’s ports are major import-export facilities.  Huge amounts of goods are imported through these ports, with final destinations throughout the United States.  Large amounts of goods from throughout the United States are exported through these ports.

Because of a lack of investment, California's ports are destined to become increasingly less important.  It’s been consensus for years that these ports need larger and more efficient breakdown and distribution centers, but serious hurdles may prevent any significant improvement.  

More importantly, California’s ports cannot accept the largest tankers or container ships, and there is no will to expand the ports to accept these very large vessels.  Canadian and Mexican Pacific port expansions and a widened Panama Canal will handle traffic that traditionally would go through California’s ports, if the ports could accommodate the ships.

At this point, I believe that the political costs of significant harbor expansion, and in fact any large infrastructure project in California, are so high that profitable investments are impossible.  

There is also the question of government competency.  Can government still build things efficiently?  There are lots of examples that suggest maybe not: 

  • The American Recovery and Reinvestment Act of 2009 was to fund almost a Trillion dollars of “shovel ready” projects.  Some roads were repaved, but nothing of real significance was built.
  • In August 2015, the EPA released three million gallons of toxic waste into the Animus River while trying to clean the site of the Gold King Mine near Silverton Colorado.
  • The eastern span of California’s San Francisco-Oakland Bay Bridge was damaged in the 1989 Loma Prieta earthquake.  Reconstruction was originally expected to cost $250 million and be completed by 2007.  It finally opened in September 2013 at a cost of $6.5 billion, and it’s still plagued with very serious problems.
  • Solyndra received a $535 million federal loan in September 2009.  It filed bankruptcy in August 2011.

There was the I35 Bridge collapse in Minneapolis.  California’s High Speed Train is an ongoing disaster.  Americas publicly run, once very successful, manned space program has been abandoned because of accidents.  We built an airport security system after 9/11 that is ineffective, hugely disruptive, and very expensive.  The list could go on and on.  Even public capital’s most prominent proponent, Larry Summers, has come to see this as a challenge to public capital.

Even if government was efficient and competent at building capital, it’s not clear what to build.  Proponents of more government capital look longingly back to the 1930s.  They talk about bridges, roads and dams.

Good luck building a major dam today.  Environmentally motivated resistance makes it impossible, which is good.  Dams are not an appropriate investment today.  Dam building in the 1930s was critical in bringing electricity to millions of Americans and reducing the frequency of major floods, but those gains have mostly been realized.  The return on future dams is far less. 

Most of the gains from new roads have also been exploited.  Slowing population growth implies that fewer new lane miles will be needed, while drone technology and autonomous vehicles may increase efficiency of existing roads.

Dams and roads are the technology of the 20th Century.  We don’t know what the technology will drive the 21st Century, but it appears that private industry will provide it.  There have been attempts to make wireless internet service a government-supplied good, but markets seem to be providing it just fine.  Is there a coffee shop in America that doesn’t provide free wireless?

Perhaps worse, governments are essentially prohibited, because of political pressures, from some potentially very profitable projects.  Call them taboo projects.  Taboo projects cannot be built no matter how profitable they may be.  These include nuclear facilities, coal or oil based energy projects, and canals.

So.  Governments are self-prohibited from some profitable projects.  The political process requires the funding of worthless projects.  And when they have a good project, governments appear incompetent at actually building it.  I’d ask why more government projects are in the platforms of the two major presidential candidates, but I’m still trying to figure out why the two major parties selected such flawed presidential candidates.  Still, those candidates provide an excellent example of how our political process leads to far-from-optimal decisions.

Bill Watkins is a professor at California Lutheran University and runs the Center for Economic Research and Forecasting, which can be found at clucerf.org.

Trump’s Pitch to Blacks

Thu, 08/25/2016 - 21:38

After Trump made a recent speech in Milwaukee in which he directly asked for black votes, I was asked to write a about it. My piece is now online in City Journal and is called “Trump’s Pitch to Blacks.”

I personally doubt whether he’s really going after black votes (though of course he wouldn’t mind getting some). Rather, this is designed to polish his image as more inclusive. What’s more, his language of “law and order” seems more designed to appeal to whites, and he mentions nothing about black grievances with the police (in contrast to his previous rhetoric in which he labeled the shootings of Alton Sterling and Philandro Castile “terrible” and “disgusting”).

He also talked about his economic policies, etc. But the focus of my piece was on his immigration pitch. Large scale immigration seems likely to downgrade black aspirations and social justice claims in the American political sphere over the long term:

As ethnic groups multiply and grow in America, often borrowing the template of the civil rights movement for their own goals, they dilute the claims of black Americans. A study by sociologists Mary C. Waters, Philip Kasinitz, and Asad L. Asad argued that “the increasing racial diversity of the population owing to immigration means policies that aim to promote racial equality but that are framed in terms of diversity often do not address the needs of native African Americans who, arguably, need such policies the most.” Diversity used to mean “black.” Now it can mean anything from a Mexican small-business owner to a Chinese software developer to a Pakistani doctor. Major Silicon Valley firms actually employ a lower share of whites than the population as a whole—and virtually no blacks.

Click through to read the whole thing.

I have generally been a proponent of immigration (or outsiders generally), arguing that a critical mass of outsiders is necessary to civic dynamism, and that we have actually sucked out many of the risk takers and entrepreneurs from Mexico.

But we can have too much of a good thing. Clearly, we’ve reached the point where the level of immigration is having socially destablizing consequences. Brexit is a perfect example. You can say that’s just racism or whatever. But even if it is, it doesn’t excuse Remainers who refused to make any changes from their share of the blame. Politics exists in the realm of human reality, not utopian ideals.

One likely consequence of U.S. diversification resulting from the current immigration trend is that the claims of blacks will be downgraded in society. Black Americans are longstanding citizens who have suffered unique historic injustices and have yet to be integrated into the economic and cultural mainstream of the country. I believe that’s an urgent task. But it doesn’t seem likely that immigrants and their children will feel a special debt to black Americans in the way that whites – soon to be a minority themselves – do.

Indeed, immigration has already shifted demographics in some cities to make the prospect of future black mayors very unlikely. I highlight this in the piece with regards to Chicago:

Immigration has also badly diluted black voting power and political influence in many cities. In 1980, Chicago was about 40 percent black and 14 percent Hispanic. Blacks and lakefront liberals formed an electoral alliance to elect Harold Washington as the city’s first black mayor in 1983. Today, after black population losses and a doubling of Latino population share, the city’s one-third white, one-third black, and one-third Latino population produces a divide-and-rule dynamic benefiting white mayors like Richard M. Daley and Rahm Emanuel.

Again, read the whole thing.

Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

Image at top my photo of an anti-Trump rally in New York. Cover photo by Gage Skidmore. CC BY-SA 3.0

Geographies of Inequality

Tue, 08/23/2016 - 22:38

Joel Kotkin’s new report, “Geographies of Inequality,” is the latest in a series of ahead-of-the-curve, groundbreaking pieces published through Third Way’s NEXT initiative. NEXT is made up of in-depth, commissioned academic research papers that look at trends that will shape policy over the coming decades. In particular, we are aiming to unpack some of the prevailing assumptions that routinely define, and often constrain, Democratic and progressive economic and social policy debates.

Dowload the .pdf report or read it on the web here.


EXECUTIVE SUMMARY

There’s little argument that inequality, and the depressed prospects for the middle class, will be a dominant issue in this year’s election, and beyond. Yet the class divide is not monolithic in its nature, causes, or geography. To paraphrase George Orwell’s Animal Farm, some places are more unequal than others.

Housing represents a central, if not dominant, factor in the rise of inequality. Although the cost of food, fuel, electricity, and tax burdens vary, the largest variation tends to be in terms of housing prices. Even adjusted for income, the price differentials for houses in places like the San Francisco Bay Area or Los Angeles are commonly two to three times as much as in most of the country, including the prosperous cities of Texas, the mid-south and the Intermountain West.

These housing differences also apply to rents, which follow the trajectory of home prices. In many markets, particularly along the coast, upwards of 40% of renters and new buyers spend close to half their income on housing. This has a particularly powerful impact on the poor, the working class, younger people, and middle class families, all of whom find their upward trajectory blocked by steadily rising housing costs.

In response to higher prices, many Americans, now including educated Millennials, are heading to parts of the country where housing is more affordable. Jobs too have been moving to such places, particularly in Texas, the southeast and the Intermountain West. As middle income people head for more affordable places, the high-priced coastal areas are becoming ever more sharply bifurcated, between a well-educated, older, and affluent population and a growing rank of people with little chance to ever buy a house or move solidly into the middle class. 

Ironically, these divergences are taking place precisely in those places where political rhetoric over inequality is often most heated and strident. Progressive attempts, such as raising minimum wages, attempt to address the problem, but often other policies, notably strict land-use regulation, exacerbate inequality.

The other major divide is not so much between regions but within them. Even in expensive regions, middle class families tend to cluster in suburban and exurban areas, which are once again growing faster than areas closer to the core. Progressive policies in some states, such as Oregon and California, have been calculated to slow suburban growth and force density onto often unwilling communities. By shutting down the production of family-friendly housing, these areas are driving prices up and, to some extent, driving middle and working class people out of whole regions.

To address the rise of ever more bifurcated regions, we may need to return to policies reminiscent of President Franklin Roosevelt, but supported by both parties, to encourage dispersion and home ownership. Without allowing for greater options for the middle class and ways to accumulate assets, the country could be headed not toward some imagined social democratic paradise but to something that more accurately prefigures a new feudalism.

Dowload the .pdf report or read it on the web here.

Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, will be published in April by Agate. He is also author of The New Class ConflictThe City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Two Views of West’s Decline

Mon, 08/22/2016 - 07:52

Summer is usually a time for light reading, and for the most part, I indulged the usual array of historical novels, science fiction as well as my passion for ancient history. But two compelling books out this year led me to more somber thoughts about the prospects for the decline and devolution of western society.

One, “Submission” by the incendiary French writer Michel Houellebecq, traces the life of a rather dissolute French literature professor as he confronts a rapidly Islamifying France. The main character, Francois, drinks heavily, sleeps with his students and focuses on the writing of the now obscure French writer, J.K. Huysmans. Detached from politics, he watches as his native country divides between Muslims and the traditional French right led by the National Front’s Marine Le Pen.

Ultimately, fear of Le Pen leads the French left into an alliance with the Muslim Brotherhood, handing power over to an attractive, clever Islamist politician. With all teaching posts requiring conversion to Islam, Francois in the end “submits” to Allah. Francois motives for conversion merge opportunism and attraction, including to the notion that, in an Islamic society, high prestige people like himself get to choose not only one wife, but several, including those barely past puberty.

The other declinist novel, “The Family Mandible” by Lionel Shriver, is, if anything more dystopic. The author covers a once illustrious family through the projected dismal decades from 2029 to 2047. Like the Muslim tide that overwhelms Francois’ France, the Brooklyn-based Mandibles are overwhelmed in an increasingly Latino-dominated America; due to their higher birthrate and an essentially “open border” policy, “Lats” as they call them, now dominate the political system. The president, Dante Alvarado, is himself an immigrant from Mexico, due to a constitutional amendment — initially pushed to place Arnold Schwarzenegger in the White House — that allows non-natives to assume the White House.

Collapse is from within

Some critics have lambasted author Shriver as being something of a Fox style right-wing revisionist while others have labeled Houellebecq as an “Islamophobe.”

But these books are far more nuanced than orthodox Muslims or progressives might assume. For one thing, neither book blames the newcomers for the crisis of their respective societies. The collapse, they suggest, is largely self-inflicted.

Read the entire piece at The Orange County Register.

Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, will be published in April by Agate. He is also author of The New Class ConflictThe City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Robert Gordon's Notable History of Economics and Living Standards

Sat, 08/20/2016 - 06:12

Professor Robert J. Gordon's The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War is a magisterial volume that will benefit any serious student of economics, demographics or history. I took the opportunity of the 28 hours of sunlight on a round trip from Detroit to Shanghai to read it, which was a productive and delightful way to make the time go faster.

Gordon is the Stanley G. Harris Professor in the Social Sciences and Professor of Economics at Northwestern University, in Evanston, Illinois. This review will summarize the basic thesis of the nearly 800 page book, and refers to Gordon's comments on urbanization and transport, which are of particular interest to newgeography.com readers.

The principal value of The Rise and Fall of American Growth, lies in its comprehensive history of the standard of living. Professor Gordon dedicates about 80 percent of the text to this issue, while using the last 20 percent for his prognostications. He uses a passage from Steven Landsberg, the University of Rochester (NY) economist to remind of the substantial and historically recent improvement in the standard of living.

Modern humans first emerged about 100,000 years ago. For the next 99,800 years or so, nothing happened. Well, not quite nothing. There were wars, political intrigue, the invention of agriculture—but none of that stuff had much effect on the quality of people's lives. Almost everyone lived on the modern equivalent of $400 to $600 a year, just above the subsistence level…. Then—just a couple of hundred years ago—people started getting richer. And richer and richer still.

The bad news, according to Gordon, is that most of the real progress in the standard of living took place between 1870 and the early 20th century --- sparked by groundbreaking advances, such as electricity, the telephone, improved sanitation, and the internal combustion engine. 

Progress, productivity and economic growth have been slower since 1970, according to Gordon, in part because subsequent technological improvements have tended to be incremental rather than transformational. For example, Gordon suggests that: "Leaving aside audio, visual, and computer-related equipment...  the only new piece of household equipment introduced after 1950 was the microwave oven."

Gordon notes that improvements to information technology have not restored the earlier stronger growth rates. He quotes Nobel Prize winning economist, Robert J. Solow, “You can see the computer age everywhere but in the productivity statistics." Gordon laments the fact that primary and secondary education has made large investments in information technology without any evident improvement in test scores: "Colleges spend vast sums on smart classrooms that require ubiquitous handholding by support staff, without any apparent benefit to educational outcomes."

There are a number of interesting videos on the Internet featuring Gordon. In some he uses an interesting illustration, asking participants what they would rather have the sanitary improvements of the three decades following the Civil War (such as sewers and flush toilets) or the advancements of the Internet and the smart phone? I suspect any choosing information technology over sanitation have not seriously considered what life was like with chamber pots, outhouses, open sewers (if there were sewers at all), water drawn from a remote communal pump and streets covered by horse droppings.

Suburbs  

Gordon has his criticisms of post-World War II suburbanization, but graciously points out their advantages without any of the all too familiar polemic.

The distinction between the city and the suburb can be overdone. Adjectives to describe each exaggerate the differences. Cities can be described as bad (dangerous, polluted, concrete) or good (diverse, dense, stimulating), and so can suburbs (homogeneous, sprawling, and dull vs. safe, healthy, and green).

Gordon recognizes that:  

Artists and intellectuals were disdainful of suburbs from the start. They were repulsed by the portrayal of suburbs as “brainless utopias” in the television sitcoms of the 1950s and 1960s. Much of the negativism reflected class divisions—those leaving the cities for the new suburbs of the 1950s were the former working class who were in the process of becoming middle class, including factory workers, retail store employees, and school teachers."  

Gordon describes the economic advantages of US suburbanization:

The suburban sprawl in the United States compared to that in Europe has advantages in productivity that help to explain why the core western European countries never caught up to the U.S. productivity level and have been falling behind since 1995.

One reason for this is that:

The European land use regulations that contain suburban sprawl and protect inner-city pedestrian districts have substantial costs in reducing economy-wide productivity and real output per capita.

He also cites a factor often missed in comparing the greater suburbanization of the US compared to Europe: "An important contributor to sprawl was arithmetic—the U.S. population more than doubled between 1950 and 2010, whereas population growth in countries such as Germany, Italy, and the United Kingdom was less than 20 percent.Even so, European suburban growth has dwarfed that of urban core sectors over the past half century.

He also decries the land use regulations that "create artificial scarcity."

Urban Transport

Gordon says that" "Much of the enthusiastic transition away from urban mass transit to automobiles reflected the inherent flexibility of the internal combustion engine—it could take you directly from your origin point to your destination with no need to walk to a streetcar stop, board a streetcar, often change to another streetcar line (which required more waiting), and then walk to your final destination." To this day, this advantage virtually bars any serious increase in transit's importance in the city. Even a more than doubling of gasoline prices and the largest economic decline since the Great Depression were not enough to attract drivers to transit, with the major metropolitan drive-alone market share rising from 73.2 percent in 2000 to 73.6 percent in 2013.

Gordon quotes automobile historian James J. Flink on the benefits of automobility, such as "an antiseptic city, the end of rural isolation, improved roads, better medical care, consolidated schools, expanded recreational opportunities, the decentralization of business and residential patterns, a suburban real estate boom, and the creation of a standardized middle-class national culture."

Further, he says that "One of the benefits of the automobile ... was the freedom it gave to farmers and small-town residents to escape the monopoly grip of the local merchant and travel to the nearest large town or small city." This appropriately stresses the point that the standard of living is not based rising incomes alone, but also requires keeping the prices of goods and services   low through competitive pressures.

The Future?

The only really controversial part of the book concentrates on the future. Here, Gordon indicates the likelihood that future growth will be more modest. George Mason University economist Tyler Cowen is more optimistic in  a Foreign Affairs review. Yet of his standard of living history, Cowan says, “Gordon’s analysis here is mostly correct, extremely important, and at times brilliant—the book is worth buying and reading for this part alone."

Gordon also suggests policies he thinks would help spur additional growth, such as raising the minimum wage. Harvard economist Edward Glaeser disagrees on the minimum wage, but is less critical than Cowan about Gordon's view of the economic future.

The latest data (2014) shows real median household incomes to be lower than 1998 and economic growth to be glacial. My fear is that history might be on Gordon's side.

Wendell Cox is principal of Demographia, an international pubilc policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Photo: The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War(http://press.princeton.edu/images/k10544.gif)

Why Most Cities Will Never Be All They Used to Be

Thu, 08/18/2016 - 22:38

Recently I published a piece on my Forbes site that discusses the disparate impact that demographic and social shifts had on larger, older U.S. cities over the second half of the 20th century.  Basically, the smaller American household size, generated by later marriages, rising divorce rates, lower fertility rates and rising life expectancy, among other things, has meant that unless cities were adding housing, they simply weren't growing.  Yeah, I know I'm quoting myself, but here's a sample:

"Most people intuitively understand the economic underpinnings of urban decline, and the economic advantages that have led to their rebound. The loss of manufacturing destroyed the economic base; the spread of globalization and the new economy has created new opportunity in cities. But far less well understood are the far-reaching cultural and social changes that impacted the demographic makeup of cities — and would have caused population loss, even without economic restructuring."

I encourage you to check it out.

I go on to suggest that population loss was inevitable for the most of the largest cities of mid-century America, and point out that today's cities may never reach their previous population peaks.  I put together a cool table that demonstrates this:

However, in putting this piece together I left quite a bit on the table, both in terms of graphics and additional content.  So consider this an addendum to the Forbes piece.

First, I think it's stunning to see a visual that illustrates the differences in a 1950 and 2010 population ceiling for the ten cities examined.  Check these out, shown two cities at a time:

I think it is absolutely stunning to see that cities like Cleveland, Detroit and St. Louis could at best (at least right now) attain maybe half of their population in 1950.  And a case could be made that smaller household size may be the most significant factor in their decline.

Three points I was unable to expand on in the Forbes piece.  First, now that the pendulum is swinging back in favor of cities, their influence is ascending faster than their population growth.  Cities are leading discussions now the economy, on infrastructure, on energy, on housing.  For the latter third of the 20th century the suburbs led that discussion.  But today, cities have reclaimed that role.  Their actual size, in terms of population, matters less today than it did 60 years ago.  

Second, the American preference for new over old has nearly as much to do with this shift as shrinking household size.  For nearly 50 years the suburbs (and by extension, the Sun Belt) was new, and that was a main feature of their attraction.  But there's also that saying, "everything old is new again."  Cities are the new thing, and while they're not everyone's cup of tea, they are doing better than at any time in the last 50 years.

Third, it's conceivable that many suburbs and/or Sun Belt cities may find themselves impacted by emerging demographic or social shifts.  Having a huge inventory of single family homes in a world that is asking for multifamily options?  A strong auto-oriented landscape when more people are looking for walkable environments?  

I'm not suggesting that all older cities are ascendant, and the suburbs and Sun Belt are doomed.  But staying ahead of trends may be the lesson all need to heed.

Pete Saunders is a Detroit native who has worked as a public and private sector urban planner in the Chicago area for more than twenty years.  He is also the author of "The Corner Side Yard," an urban planning blog that focuses on the redevelopment and revitalization of Rust Belt cities.

Top photo: Vacant homes in Philadelphia, awaiting their revitalization.  Source: smartgrowthamerica.org

Eastern Europe Heads For A Brave Old World

Wed, 08/17/2016 - 22:38

Will a unified Europe survive Britain’s vote on Brexit? The referendum of last June pointed the country out of the European Union. Will France or Italy follow suit? If so, it could doom the structure that began in the 1950s as a customs union, if not an uneasy economic alliance to keep Germany from rearming and dominating central Europe. And will a consequence of Brexit be the re-emergence of Russia as the dominant power in Eastern Europe? Or will the European Union last long enough to bring prosperity to the forgotten countries of Eastern Europe?

I thought about these questions when I recently boarded a night train in Zurich. Switzerland has never been a member of the European Union, but it coexists with the EU through a series of bilateral agreements, similar to those that Britain will now seek. I was heading east on a series of sleepers that took me through Austria, Slovakia, Hungary, Serbia, and Bulgaria, precisely those countries that a unified Europe had aimed to lift into prosperity.

I expected to find an absence of trade barriers, and see lands benefiting from the common currency, the euro, which is used by nineteen of the twenty-eight EU members. Instead, I felt as thought I was descending into a Brave Old World, that of a Europe with guarded borders and separate currencies, a land best imagined as lying on the far side of an economic Iron Curtain rather than a political one. Here’s the view from the train window:

Austria: Along with its capital city, Vienna, Austria has been an EU winner. Into the 1980s Vienna was a cul-du-sac of the Cold War; the dead end, final stop of Western European laissez-faire economic polices that nestled against the dragon teeth and barbed wire of the Soviet sphere of influence.

After the wall fell, Vienna became a glittering capital of central Europe, the ideal city for both corporate headquarters and long weekends at the opera. Its banks and companies flourished, and much trade with the new countries of the East began and ended in the Austrian capital, which lies on the western edge of the great Hungarian plains.

Without the EU, however, Austria would be at risk of becoming a more dynamic Slovenia.

Slovakia: A stepchild of the Soviet dissolution, Slovakia is the rump state to the east of the Czech Republic, the other half of divided Czechoslovakia. Its capital is in Bratislava, which is something of a Viennese suburb. The rest of the country, surrounded by Poland, Hungary, and Ukraine, is best understood as a heavy machine shop of collectivization, where there is now more demand for imported jeans than for Comecon turbines.

An EU member in the Eurozone — that is, a member that uses the euro as its currency — Slovakia is betting its economic future on the basis of its low-costs and proximity to Austria, which has attracted a number of Western car companies, including Jaguar. A nice hotel room is €45.

Conversely, Western consumers are indifferent to Slovakian products, goods, and services, which has positioned Turkey as one of the country’s leading trade partners.

I spent an evening with a Slovakian who is fixing up his house. His solution wasn’t to order British or French fixtures from within the EU, but to import a container full from Istanbul, complete — so he implied — with Turkish workers to hitch up the low-cost appliances and lighting.

Hungary: In the go-go years of European expansion, Hungary was the France of Eastern Europe, a proud civilization that dates back more than a thousand years. Its capital city, Budapest, is a place of grace and sophistication.

London bankers invested their bonuses in Pest apartment flats, and discount airlines flooded the Buda hills with wandering tourists.

In the soon-to-be-reordered European Union, Hungary could become neither here nor there. Its nationalist, right wing parties (70 percent of the recent election) dream of a Hungarian greatness that was lost at Trianon after World War I and in Transylvania. But the Hungarians have no idea whether its salvation lies in turning east toward Russia, north toward Germany, or west toward a fragmented EU.

Without a lodestone that inspires optimism, Hungary finds it easier to blame its problems on gays, immigrants, Viennese bankers, and the EU, not to mention the protocols of the elders of Zion.

Serbia: My overnight train from Budapest to Belgrade was covered with graffiti, giving it the air of a wayward New York City subway train from the 1970s, although one with couchettes and without break dancers.

NATO bombed Belgrade in spring 1999, in support of Kosovo's independence. Legally, Kosovo is an autonomous region of Serbia, but in practicality it is a NATO protectorate, the love child of Madeline Albright’s and Richard Holbrooke’s air campaign.

Among the casualties of that air war was Serbian enthusiasm for all things American and European. The isolated, rump republic of 11 million Serbs has become an orphanage of disaffected Europeans who remain locked away from Western prosperity with a stillborn economy.

In theory, Serbia, the nearby republics of Macedonia and Montenegro, and perhaps even a new republic in Kosovo were to rise into the middle class through membership in the European Union. In reality, the EU has no more appetite for Serbia’s tottering banks or pig farms than it does for more Greek debentures.

Bulgaria: Sofia, the capital, is 225 miles from Belgrade, the same distance as Boston is from New York City, but my meandering sleeper took twelve hours to make the overnight trip, which included several hours at dawn on the Serbian-Bulgarian border, the site of many Balkan wars.

Carved from the Ottoman Empire at the 1878 Treaty of Berlin, Bulgaria could rightfully claim to be both the last piece on the European chess board and the best barometer of EU efficacy in the twenty-first century. Some polls say it is the most unhappy EU member. As a city, Sofia is a pleasant combination of socialist realism, Balkan impressionism, and a few modern glass towers.

I first visited it in summer 1976, when Bulgaria was hewing the Marxist line with Stalinist devotion. Now, in summer 2016, the oppression comes from a hybrid form of capitalism that mixes Leninist sympathies with mafia business practices. No wonder the EU isn’t in any rush to bring the euro to Bulgaria, although the country is a member of the confederation.

Bulgaria's political dilemma is that its gas is a hostage to fortunes in Russia and Ukraine (where all the pipelines originate), while its subsidies and regulations come from Brussels.

***

Sadly, I doubt the EU will last much longer. Brexit marks the ebb tide of European optimism, and part of the reason the British voted themselves out is a wish to send home Hungarian, Slovak, and Bulgarian immigrants who despair of making a living in their own countries.

Brexit is also a diplomatic move in the increasing cold war between Western Europe and Islam, whose fault lines run precisely through Bosnia, Albania, Bulgaria, Macedonia, and Turkey.

When the Brexit vote took place, Europe was in the midst of a terror spree that had Muslim fanatics opening fire on shoppers in a Munich mall and driving a truck through a Nice street fair on Bastille Day. Is it any wonder that Britain, staring at refugees camped out in Calais, would raise the draw bridge?

Brexit is also a victory for Putin’s Russia and its gangster capitalism. Until the invasions of Crimea and Ukraine, Russia felt encircled by NATO in Turkey and by the EU in the Baltic States. Now, however, Europe has the look of what diplomatic histories used to call a “dead letter,” leaving much of Eastern Europe vulnerable to a modern Russian Risorgimento.

In the EU, only Germany is earning any money, and it is only a matter of time before Angela Merkel is voted out of office. A new leader there — appealing to nationalist sentiments — will ask German voters, “Why are you working for 4.5 years, on average, to pay the subsidies that are handed out to lazy Spaniards, Greeks, and Italians?”

As someone who admired the European Union, riding trains from Zurich to Sofia reminded me of the downside of old Europe. I hated changing money in train stations, and being woken up by border guards at forlorn crossings like Dimitrograd (Serbia) or Kalotina (Bulgaria). More disturbing was to see, in Belgrade parks or along rail lines, Syrian refugees living like cattle that is drifting north across an arid plain.

The EU was created to embrace free trade and freedom of movement across a continent of 400 million that, in the past, has failed to compensate for overlapping national claims by adjusting borders.

Brexit is one overt expression of dissatisfaction with Europe. But EU failures can also be seen across countries that have changed little since Bismarck, an early Pan-European, said the Balkans were not "worth the bones" of a single Prussian grenadier.

Matthew Stevenson, a contributing editor of Harper’s Magazine, is the author of, among other books Remembering the Twentieth Century Limited, and Whistle-Stopping America. His next book, Reading the Rails, is due out in August. He lives in Switzerland.

Flickr photo by sbrrmk: Rhodope Mountains, Bulgaria

Welcome To Y'all Street: The Cities Challenging New York For Financial Supremacy

Tue, 08/16/2016 - 22:38

From the earliest days of the Republic, banking and finance has largely been the purview of what one historian calls the “Yankee Empire.” Based largely in New York and Boston, later on financial centers grew along the main route of Yankee migration to Chicago and San Francisco.

Yet, if you look at where financial jobs are now headed, perhaps it’s time, as the Dallas Morning News cheekily suggested recently, to substitute Y’all Street for Wall Street. Finance, increasingly conducted electronically, is no longer tethered to its traditional centers. Large global financial companies like UBS, Deutsche Bank , Morgan Stanley and Goldman Sachs are all committed to relocating operations to less expensive locations.

In the U.S., this has benefited the South the most. This year’s list of the metro areas that are increasing employment in financial services at the fastest rate is led by first-place Nashville-Davidson-Murfreesboro-Franklin, Tenn., No. 2 Dallas-Plano-Irving, Texas, No. 4 Austin-Round Rock, Texas, and No. 5 Charlotte-Concord-Gastonia N.C.-S.C.

Financial service employment is important, particularly since the recovery from the 2008 financial meltdown. The industry is second in the U.S. only to the professional and business services sector in terms of the number of people it employs in high-paying jobs (average salary: $62,860), and its recent growth has been spread across the country. Of the 70 large metro areas we studied, only three have lost financial jobs since 2010.

Methodology

To generate our ranking, we looked at employment growth in the 366 metropolitan statistical areas for which BLS has complete data going back to 2005, weighting growth over the short-, medium- and long-term in that span, and factoring in momentum — whether growth is slowing or accelerating. (For a detailed description of our methodology, click here.)

The South Rises Again

The shift to the South seems to be based on several factors: lower costs (including for housing), less regulation and expanding markets, driven by rapid population growth. As population has shifted to the South, most notably low-tax states like Tennessee and Texas, it has clearly increased local demand for financial services. But there’s also another factor: the migration of financial jobs from traditional centers such as New York, Chicago and Los Angeles.

Our top emerging financial superstar, Nashville, has all these characteristics.

Since 2010, the area’s financial workforce has expanded 24.5 percent to 60,900. Population growth and in-migration rates have been spectacular.

Between 2010 and 2014, in-migration accounted for 65.4 percent of local population growth, the fifth highest proportion among the nation’s top 25 metro areas that added more than 100,000 people, while the overall population soared 10 percent.  Since the recession ended in 2009, employment has grown 21 percent while per capita income has risen 4 percent. Financial sector growth has come from firms with U.S. headquarters in the New York area, such as Switzerland-based UBS, as well as from locally based financial firms, like the investment bank Avondale Partners.

But the biggest raw job gains, as we also found in professional and business services, are in No. 2 Dallas-Plano-Irving, where financial employment has expanded 23.2 percent since 2010 to 226,100 jobs, making the metro area the third-biggest financial services hub in the nation behind New York and Chicago. If the adjacent Ft. Worth area is added in, the region boasts a total of 282,000 financial job, behind only New York. Unlike Houston, slowed by the oil industry downturn, Dallas is on a super-sized roll.

The Big D’s drive to become “y’all street” also stems from the recipe of large-scale population growth, low taxes, affordable housing and business friendliness. Large corporate relocations, such as Toyota from California, creates new demand both from business and consumers.

To be sure, a New Yorker could scoff at the idea of Dallas replacing Manhattan as a financial center as something akin to the old Texas insult: all hat and no cattle. Yet it might behoove uppity Gothamites to pay more attention to the big Texas metroplex. The area’s dispersed financial institutions may not look like those associated with Manhattan, but they are growing more quickly, and in a place where middle managers can thrive on modest salaries. Then there’s the advantages of its central location, one of the things that led Comerica to move its headquarters to Dallas in 2007. More recently, State Farm and Liberty Mutual have opened large operations in the northern suburbs.

But it’s not just Texas and Tennessee that are dominating the dispersion of financial services jobs. Before the recession, No. 5 Charlotte, N.C., had risen to become the second-largest financial center in the country, home to Bank of America and Wachovia. Wachovia fell hard in the financial crisis, and was swallowed by Wells Fargo, but BofA soldiers on, and the area clearly has recovered from the recession doldrums. Since 2010, the metro area’s financial workforce has grown 14.2 percent to 86,100 jobs, with 5 percent growth last year alone.

The Rise Of The Mormon Belt?

Outside the south, the other big growth area for financial services lies in the Intermountain West, the vast region between California’s Sierras and the Rockies. Two metro areas stand out in terms of financial growth: No. 3 Salt Lake City area and No. 6 Phoenix. Like the Texas cities, these metro areas offer middle managers a huge housing advantage; home prices, adjusted for incomes, are roughly half those in New York, Los Angeles and San Francisco.

Salt Lake City’s financial services job count has grown 19.9 percent since 2010 to 55,200 jobs, with 6.2 percent growth last year alone. The Utah capital has gained particular renown as Goldman Sachs’fourth-largest global hub, and is slated to keep growing. Particularly attractive for Goldman is the language skills of returning Mormon missionaries.

Rapid financial growth is now common across the “Mormon belt” that stretches from Arizona to Idaho. Among mid-sized metro areas (those with less than 450,000 nonfarm jobs),  Boise ranks second for financial services job growth, followed byProvo-Orem, Utah, and No. 5 Clearfield-Ogden. With young and well-educated workforce, and relatively low (particularly compared to California) housing prices, these areas are creating a whole new archipelago of financial centers.

At the southern end of the Mormon belt sits Phoenix. Like the southern financial boom towns, the Valley of the Sun is booming both demographically and in terms of jobs; financial positions are up 19.7 percent since 2010.

Much of this follows the movement of people from other parts of the country, notably California and the Midwest. Financial companies, too, are migrating south such as Chicago-based Northern Trust, which moved 1,000 jobs last year to Tempe, a close in Phoenix suburb. Growth in financial services has helped bring some life back to the long torpid office market, attracting new investors.

The Big Boys

Despite the growth in the top cities on our list, the central position of New York remains unassailable. After hard times amid the financial crisis, employment has risen a modest 6.3 percent since 2010 to 461,500, over 200,000 more than second-place Chicago, and salaries are on the rise again.

What has changed is where the challenges may come from. Its onetime main rivals, 56th place Chicago-Naperville- Arlington Heights and Los Angeles (57th) are not even keeping pace, and seem destined to fall even further behind. Similarly,  other likely financial rivals, like No. 21 San Francisco-Redwood City-South San Francisco, No. 39 Boston-Cambridge-Newton or No. 49 Seattle-Bellevue-Everett aren’t growing fast enough to mount a major challenge.

If New York’s supremacy is to be challenged, it will instead likely be from the lower-cost places that dominate our list in the South and Intermountain West. With the exception of Dallas, no single one of these metro areas could conceivably grow to be big enough to threaten Gotham’s leadership, but over time they could in aggregate weaken its predominance, spreading financial power to what are largely relatively youthful financial centers.

This piece originally appeared in Forbes.

Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, will be published in April by Agate. He is also author of The New Class ConflictThe City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Michael Shires, Ph.D. is a professor at Pepperdine University School of Public Policy.

Life Is Beautiful in America When You’re Paul Krugman

Mon, 08/15/2016 - 22:38

I live on the Upper West Side in New York and love it. But when Paul Krugman wrote a blog post using the UWS an example of what’s right in America – “If you want to feel good about the state of America, you could do a lot worse than what I did this morning: take a run in Riverside Park” –  I had to respond.  Not only is the UWS obviously unrepresentative of America, but many people see its prosperity as purchased at least in part at their expense.

My piece “Paul Krugman’s Bubble” is now online at City Journal:

Most Americans have never heard of gorgeous Riverside Park. In fact, they may have only a vague idea about the Upper West Side of Manhattan, the neighborhood where Riverside Park is located. But they understand that life on the Upper West Side—and places like it—is fabulous for the people who live there. Such places have boomed thanks to changes in the economy, but also from deliberate government policies designed to make them prosper. Wall Street, unlike Main Street, got bailed out during the financial crash. Most Americans may not be able to tell you what TARP stands for, or what quantitative easing is, but they have a good understanding of who profited the most from them—and that such people often take morning jogs in places like Riverside Park.

Click through to read the whole thing.

Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

The Upper West Side of New York – Image via City Journal

California for Whom?

Sun, 08/14/2016 - 22:38

“Old in error,” writes historian Kevin Starr, “California remains an American hope.” Historically, our state has been a beacon to outsiders seeking a main chance: from gold miners and former Confederates to Midwesterners displaced by hardship, Jews seeking opportunity denied elsewhere, African Americans escaping southern apartheid, Asians fleeing communism and societal repression, Mexicans looking for a way out of poverty, counter-culture émigrés looking for a place where creation can overcome repression.

Yet, this notion of California as a land of outsiders is being turned on its head, our state’s dream repackaged — often with the approval of its ruling hegemons — as something more like a medieval city, expelling the poor and the young, while keeping the state’s blessings to the well-educated, well-heeled, and generally older population.

Some boosters of the current order, such Gov. Jerry Brown, contend that the affluent and the educated are still coming, while the less educated and well-heeled, are leaving. They cite this as evidence that the “declinists” are wrong. Yet, the reality remains that California is losing its allure as a place of opportunity for most.

COMING AND GOING

California has been “bleeding” people to other states for more than two decades. Even after the state’s “comeback,” net domestic out-migration since 2010 has exceeded 250,000. Moreover, the latest Internal Revenue Service migration data, for 2013-2014, does not support the view that those who leave are so dominated by the flight of younger and poorer people. Of course, younger people tend to move more than older people, and people seeking better job opportunities are more likely to move than those who have made it. But, according to the IRS, nearly 60,000 more Californians left the state than moved in between 2013 and 2014. In each of the seven income categories and each of the five age categories, the IRS found California lost net domestic migrants.

Nor, viewed over the long term, is California getting “smarter” than its rivals. Since 2000, California’s cache of 25- to 34-year-olds with college, postgraduate and professional degrees grew by 36 percent, below the national average of 42 percent, and Texas’ 47 percent. If we look at the metropolitan regions, the growth of 25- to 34-year-olds with college degrees since 2000 has been more than 1.5 to nearly 3 times as fast in Houston and Austin as in Silicon Valley, Los Angeles, or San Francisco. Even New York, with its high costs, is doing better.

In fact, the only large California metropolitan area which has seen anything like Texas growth has been the most unlikely, the Inland Empire. The coastal areas, so alluring to the media and venture capitalists, are losing out in terms of growing their educated workforces, most likely a product of high housing prices and, outside of the Bay Area, weak high-wage job growth.

The location of migrants tells us something about where the allure of California remains the strongest, and where it has been supplanted. Almost all of the leading states sending net migrants here are also high-tax, high-regulation places that have been losing domestic migrants for years — New York, Illinois, Michigan and New Jersey. In contrast, the net outflow has been largely to lower-cost states, notably Texas, as well as neighboring Western states, all of which have lower housing prices.

And, finally, there is the issue of age. Historically, California has been a youth magnet, but that appeal is fading. In 2014, according to the IRS data, more than two-thirds of the net domestic out-migrants were reported on returns filed by persons aged from 35 to 64. These are the people who are most likely to be in the workforce and be parents.

CLASS AND ETHNIC PATTERNS

Upward mobility has long been a signature of California society. Yet, 22 of the state’s large metro areas have seen a decline in their middle class, according to a recent Pew Research Center study. Los Angeles, in particular, has suffered among the largest hollowing out of the middle-income population in the country. In places like the Bay Area, there’s a growing upper class, while in less glamorous places like Sacramento, it’s the low end that is expanding at the expense of the middle echelons.

The economy, too, has been tending toward ever more bifurcation, with some growth in tech and business services, largely in the Bay Area. Elsewhere, the overwhelming majority of jobs created since 2007 have come from lower-paying professions, such as health and education and hospitality, or, recently, from real estate-related activities. Overall, traditional, higher-paying, blue-collar jobs – such as construction and durable goods manufacturing – have continued to lose ground. Most California metropolitan areas, most notably Los Angeles, lag most key national competitors — including Texas metro areas, Phoenix, Nashville, Tenn., Charlotte, N.C., and Orlando, Fla. — in higher-paid new jobs in business services and finance.

But the biggest losers of egalitarian aspirations have been the constituencies most loudly embraced by the state’s progressive establishment: black and brown Californians. Nowhere is this disparity greater than in home ownership, the signature measure of upward mobility and entrance into the middle class. Overall, Latino homeownership in California is 41.9 percent; nationally, it’s 45 percent, and in Texas it’s 55 percent. Similarly, among African Americans, homeownership is down to 34 percent in California, compared to 41 percent nationally and 40.8 percent in Texas. In Los Angeles, which has the lowest overall homeownership percentage among the nation’s largest metro areas, only 37 percent of Hispanics own their own homes, compared to 50 percent in Dallas-Fort Worth.

CALIFORNIA’S ROAD FORWARD

One popular progressive theory for how to address the economy lies in trying to emulate places like Massachusetts, a state whose per-capita income ranks among the highest in the country. Yet, this approach fails to confront the huge demographic differences between the states.

Let’s start with ethnicity. Eighty percent of Massachusetts’ population is comprised of non-Hispanic whites or Asians, who traditionally have higher incomes, while in California whites and Asians constitute only 52 percent. Some 80 percent of the Boston metropolitan area is non-Hispanic white or Asian, compared to only 46 percent the population in the Los Angeles-Orange County area, and 40 percent in the Inland Empire. California has a poverty rate, adjusted for housing costs, of 23.4 percent, while Massachusetts, with its lower share of more heavily disadvantaged minority populations, registers just 13.8 percent.

California could only resemble Massachusetts if it successfully unloaded much of its disadvantaged minority and working-class population. Although some might celebrate the movement of poorer people out of the state, our poverty rate is unlikely to decrease, since historically disadvantaged ethnicities (African Americans and Hispanics) account for 58 percent of the under-18 population in California, and only 25 percent in Massachusetts.

Simply put, California faces a gargantuan challenge of generating a better standard of living for a huge proportion of its population. To be sure, both the San Francisco and San Jose metropolitan areas can thrive, like Massachusetts, in a highly education-driven economy. But states like California, Texas and Florida are too diverse, in class and race, to follow the “Massachusetts model.” We need good blue-collar and white-collar, middle-income jobs to keep a more diverse, and somewhat less well-educated, population adequately housed and fed.

This should be the primary concern of our state. But the governor and legislators seem more interested today in re-engineering our way of life than improving outcomes. True, if you drive up housing and energy prices, some of the poor will leave, but so, too, will young people, the future middle class. Though our largest coastal metropolitan counties — Los Angeles, Orange, San Diego, Alameda, Contra Costa, San Mateo and San Francisco — have long been younger than the rest of country, soon they will be more gray than the nation.

The demographic future of California seems increasingly at odds with the broad “dream” that Starr and others evoke so powerfully. We are headed ever more toward a state of divided realities, of poorer, downwardly mobile people, largely in the interior and in inner-city Los Angeles or Oakland, and a rapidly aging, wealthier, whiter enclave hugging the coast. For those with the right education, inheritance and a large enough salary, the California dream still shines bright, but for the majority it seems like a dying light.

This piece first appeared in the Los Angeles Daily News.

Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, will be published in April by Agate. He is also author of The New Class ConflictThe City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Wendell Cox is principal of Demographia, an international pubilc policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Photograph: Great Seal of the State of California by Zscout370 at en.wikipedia [CC BY-SA 3.0],from Wikimedia Commons

Today’s Tech Oligarchs Are Worse Than the Robber Barons

Fri, 08/12/2016 - 22:38

Yes, Jay Gould was a bad guy. But at least he helped build societal wealth. Not so our Silicon Valley overlords. And they have our politicians in their pockets.

A decade ago these guys—and they are mostly guys—were folk heroes, and for many people, they remain so. They represented everything traditional business, from Wall Street and Hollywood to the auto industry, in their pursuit of sure profits and golden parachutes, was not—hip, daring, risk-taking folk seeking to change the world for the better.

Now from San Francisco to Washington and Brussels, the tech oligarchs are something less attractive: a fearsome threat whose ambitions to control our future politics, media, and commerce seem without limits. Amazon, Google, Facebook, Netflix, and Uber may be improving our lives in many ways, but they also are disrupting old industries—and the lives of the many thousands of people employed by them. And as the tech boom has expanded, these individuals and companies have gathered economic resources to match their ambitions.

And as their fortunes have ballooned, so has their hubris. They see themselves as somehow better than the scum of Wall Street or the trolls in Houston or Detroit. It’s their intelligence, not just their money, that makes them the proper global rulers. In their contempt for the less cognitively gifted, they are waging what The Atlantic recently called “a war on stupid people.”

I had friends of mine who attended MIT back in the 1970s  tell me they used to call themselves “tools,” which told us us something about how they regarded themselves and were regarded. Technologists were clearly bright people whom others used to solve problems or make money. Divorced from any mystical value, their technical innovations, in the words of the French sociologist Marcel Mauss, constituted “a traditional action made effective.” Their skills could be applied to agriculture, metallurgy, commerce, and energy.

In recent years, like Skynet in the Terminator, the tools have achieved consciousness, imbuing themselves with something of a society-altering mission. To a large extent, they have created what the sociologist Alvin Gouldner called “the new class” of highly educated professionals who would remake society. Initially they made life better—making spaceflight possible, creating advanced medical devices and improving communications (the internet); they built machines that were more efficient and created great research tools for both business and individuals. Yet they did not seek to disrupt all industries—such as energy, food, automobiles—that still employed millions of people. They remained “tools” rather than rulers.

With the massive wealth they have now acquired, the tools at the top now aim to dominate those they used to serve. Netflix is gradually undermining Hollywood, just as iTunes essentially murdered the music industry. Uber is wiping out the old order of cabbies, and Google, Facebook, and the social media people are gradually supplanting newspapers. Amazon has already undermined the book industry and is seeking to do the same to apparel, supermarkets, and electronics.

Past economic revolutions—from the steam engine to the jet engine and the internet—created in their wake a productivity revolution. To be sure, as brute force or slower technologies lost out, so did some companies and classes of people. But generally the economy got stronger and more productive. People got places sooner, information flows quickened, and new jobs were created, many of them paying middle- and working-class people a living wage.

This is largely not the case today. As numerous scholars including Robert Gordon have pointed out, the new social-media based technologies have had little positive impact on economic productivity, now growing at far lower rates than during past industrial booms, including the 1990s internet revolution.

Much of the problem, notes MIT Technology Review editor David Rotman, is that most information investment no longer serves primarily the basic industries that still drive most of the economy, providing a wide array of jobs for middle- and working-class Americans. This slowdown in productivity, notes Chad Syverson, an economist at the University of Chicago Booth School of Business, has decreased gross domestic product by $2.7 trillion in 2015—about $8,400 for every American. “If you think Silicon Valley is going to fuel growing prosperity, you are likely to be disappointed,” suggests Rotman.

One reason may be the nature of “social media,” which is largely a replacement for technology that already exists, or in many cases, is simply a diversion, even a source oftime-wasting addiction for many. Having millions of millennials spend endless hours on Facebook is no more valuable than binging on television shows, except that TV actually employs people.

At their best, the social media firms have supplanted the old advertising model, essentially undermining the old agencies and archaic forms like newspapers, books, and magazines. But overall information employment has barely increased. It’s up 70,000 jobs since 2010, but this is after losing 700,000 jobs in the first decade of the 21st century.

Tech firms had once been prodigious employers of American workers. But now, many depend on either workers abroad of imported under H-1B visa program. These are essentially indentured servants whom they can hire for cheap and prevent from switching jobs. Tens of thousands of jobs in Silicon Valley, and many corporate IT departments elsewhere, rent these “technocoolies,” often replacing longstanding U.S. workers.

Expanding H-1Bs, not surprisingly, has become a priority issue for oligarchs such as Bill Gates, Mark Zuckerberg, and a host of tech firms, including Yahoo, Cisco Systems, NetApp, Hewlett-Packard, and Intel, firms that in some cases have been laying off thousands of American workers. Most of the bought-and-paid-for GOP presidential contenders, as well as the money-grubbing Hillary Clinton, embrace the program, with some advocating expansion. The only opposition came from two candidates disdained by the oligarchs, Bernie Sanders and Donald Trump.

Now cab drivers, retail clerks, and even food service workers face technology-driven extinction. Some of this may be positive in the long run, certainly in the case of Uber and Lyft, to the benefit of consumers. But losing the single mom waitress at Denny’s to an iPad does not seem to be a major advance toward social justice or a civilized society—nor much of a boost for our society’s economic competitiveness. Wiping out cab drivers, many of them immigrants, for part-time workers driving Ubers provides opportunity for some, but it does threaten what has long been one of the traditional ladders to upward mobility.

Then there is the extraordinary geographical concentration of the new tech wave. Previous waves were much more highly dispersed. But not now. Social media and search, the drivers of the current tech boom, are heavily concentrated in the Bay Area, which has a remarkable 40 percent of all jobs in the software publishing and search field. In contrast, previous tech waves created jobs in numerous locales.

This concentration has been two-edged sword, even in its Bay Area heartland. The massive infusions of wealth and new jobs has created enormous tensions in San Francisco and its environs. Many San Franciscans, for example, feel like second class citizens in their own city. Others oppose tax measures in San Francisco that are favorable to tech companies like Twitter. There is now a movement on to reverse course and apply “tech taxes” on these firms, in part to fund affordable housing and homeless services. Further down in the Valley, there is also widespread opposition to plans to increase the density of the largely suburban areas in order to house the tech workforce. Rather than being happy with the tech boom, many in the Bay Area see their quality of life slipping and upwards of a third are now considering a move elsewhere.

Once, we hoped that the technology revolution would create ever more dispersion of wealth and power. This dream has been squashed. Rather than an effusion of start-ups we see the downturn in new businesses. Information Technology, notes The Economist, is now the most heavily concentrated of all large economic sectors, with four firms accounting for close to 50 percent of all revenues. Although the tech boom has created some very good jobs for skilled workers, half of all jobs being created today are in low-wage services like retail and restaurants—at least until they are replaced by iPads and robots.

What kind of world do these disrupters see for us? One vision, from Singularity University, co-founded by Google’s genius technologist Ray Kurzweil, envisions robots running everything; humans, outside the programmers, would become somewhat irrelevant. I saw this mentality for myself at a Wall Street Journal conference on the environment when a prominent venture capitalist did not see any problem with diminishing birthrates among middle-class Americans since the Valley planned to make the hoi polloi redundant.

Once somewhat inept about politics, the oligarchs now know how to press their agenda. Much of the Valley’s elite–venture capitalist John Doerr, Kleiner Perkins, Vinod Khosla, and Google—routinely use the political system to cash in on subsidies, particularly for renewable energy, including such dodgy projects as California’s Ivanpah solar energy plant. Arguably the most visionary of the oligarchs, Elon Musk, has built his business empire largely through subsidies and grants.

Musk also has allegedly skirted labor laws to fill out his expanded car factory in Fremont, with $5-an-hour Eastern European labor; even when blue-collar opportunities do arise, rarely enough, the oligarchs seem ready to fill them with foreigners, either abroad or under dodgy visa schemes. Progressive rhetoric once used to attack oil or agribusiness firms does not seem to work against the tech elite. They can exploit labor laws and engage in monopoly practices with little threat of investigation by progressive Obama regulators.

In the short term, the oligarchs can expect an even more pliable regime under our likely next president, Hillary Clinton. The fundraiser extraordinaire has been raising money from the oligarchs like Musk and companies such as Facebook. Each may vie to supplant Google, the company with the best access to the Obama administration, over the past seven years.

What can we expect from the next tech-dominated administration? We can expect moves, backed also by corporate Republicans, to expand H-1B visas, and increased mandates and subsidies for favored sectors like electric cars and renewable energy. Little will be done to protect our privacy—firms like Facebook are determined to limit restrictions on their profitable “sharing” of personal information. But with regard to efforts to break down encryption systems key to corporate sovereignty, they will defend privacy, as seen in Apple’s resistance to sharing information on terrorist iPhones. Not cooperating against murderers of Americans is something of fashion now among the entire hoodie-wearing programmer culture.

One can certainly make the case that tech firms are upping the national game; certain cab companies have failed by being less efficient and responsive as well as more costly. Not so, however, the decision of the oligarchs–desperate to appease their progressive constituents–to periodically censor and curate information flows, as we have seen at Twitter and Facebook. Much of this has been directed against politically incorrect conservatives, such as the sometimes outrageous gay provocateur Milo Yiannopoulos.

There is a rising tide of concern, including from such progressive icons as former Labor Secretary Robert Reich, about the extraordinary market, political, and culture power of the tech oligarchy. But so far, the oligarchs have played a brilliant double game. They have bought off the progressives with contributions and by endorsing their social liberal and environmental agenda. As for the establishment right, they are too accustomed to genuflecting at mammon to push back against anyone with a 10-digit net worth. This has left much of the opposition at the extremes of right and left, greatly weakening it.

Yet over time grassroots Americans may lose their childish awe of the tech establishment. They could recognize that, without some restrictions, they are signing away control of their culture, politics, and economic prospects to the empowered “tools.” They might understand that technology itself is no panacea; it is either a tool to be used to benefit society, increase opportunity, and expand human freedom, or it is nothing more than a new means of oppression.

This piece first appeared in The Daily Beast.

Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, will be published in April by Agate. He is also author of The New Class ConflictThe City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Official White House Photo by Pete Souza.

Still Migrating to Texas and Florida: 2013-2014 IRS Data

Thu, 08/11/2016 - 22:38

The Internal Revenue Service (IRS) has released its 2013 to 2014 migration data. This data provides estimates of residential movement between counties and states based on the number of claimed exemptions on IRS income tax forms. According to IRS, this "approximates the number of individuals" who moved between jurisdictions. Of course, not all people are covered by filed income tax returns, yet this covers   approximately 80 percent of the population, and unlike Census Bureau annual data, this is counts of actual people (and incomes). As such, the IRS data is probably the best approximation of domestic migration available. This article outlines data relating to state to state (and District of Columbia) domestic migration.

Net Domestic Migration: Gainers

Net domestic migration, calculated by subtracting the number of people moving out of state from the number of people moving into a state, was by far the greatest in Texas and Florida. This is not surprising, since these states have routinely been at the top of the domestic migration league tables for virtually all of the new century. The once exception was for a brief period during the housing bubble when the Florida numbers were depressed. During that period, Florida's reached levels only exceeded by California but have since been moderated. That, plus a severe local recession, were associated with the drop in net domestic migration.

This year's champion was Texas. The Lone Star State had net domestic migration of 229,300. This is more than double the net domestic migration of second ranking Florida and exceeds the total net domestic migration of the other 16 states that gained. The District of Columbia and 30 states experienced net domestic losses between 2013 and 2014.

Florida added 114,400 net domestic migrants, which is nearly 4 times as large as third ranking South Carolina (30,100). Colorado followed closely, at 29,500 net domestic migrants, with Washington placing fifth (Figure 1)

Net Domestic Migration: Losers

The states with the largest net domestic migration losses are no surprise. New York, which has led net domestic out-migration in most recent years, did so again, with the loss of 126,800. Illinois lost the second greatest number of domestic migrants at 82,000. California ranked third, with a loss of 57,900. New Jersey had the fourth largest loss at 46,000, followed by Pennsylvania at 27,500 (Figure 2).



State Attraction Ratio

A state attraction ratio was developed, by dividing out-migration by in-migration (stated in out-migrants per 100 in-migrants). Not surprisingly, the highest state attraction ratio was in Texas, at 156.3, South Carolina ranked second, with 127.3 in-migrants per 100 out-migrants, with Florida close behind at 126.7. The fourth and fifth highest state attraction rates were in Oregon, at 122.3 and North Dakota at 120.2 (Figure 3).

The lowest state attractions ratio --- those places were leavers most outpaced in-migrants --- was in New York, where 65.4 people moved into the state for every 100 who moved out. Illinois was close behind at 67.1. In New Jersey, the ratio was 75.9, in Connecticut 78.3 and Alaska had the fifth lowest state attraction ratio at 80.1 (Figure 4)



Income per Capita: In-migrants

In 17 states, the per capita income of people moving from other states exceeded that of their new state's overall average income. The biggest differences was in Florida, where in-migrant incomes were 30.5 percent higher than average. Migrants to South Carolina averaged 18.6 percent more than the state average income, while migrants to Maine had 18.3 percent higher incomes. The top five was rounded out by New Hampshire, where in-migrants had average incomes 14.0 percent greater than average and Arizona where the differential was 9.8 percent (Figure 5)

The lowest in-migrant incomes relative to state averages were in states with large resource industries. The biggest difference was in North Dakota, where the average new resident had an income 33.5 percent below average. In Alaska, the difference was 30.7 percent, while in Wyoming it was 23.0 percent. Newcomers to Nebraska averaged 22.6 percent below the state average, while the fifth lowest figure was registered in Oklahoma at -21.3 percent (Figure 6)



Income per Capita: Out-migrants

In 17 states, people heading for other states had higher incomes per capita than the average in their former states. The biggest differential was in Maine, where out-migrants had average incomes 20.1 percent higher than the overall state average. The second largest differential was in California where out-migrants had 19.7 percent higher incomes than California residents who remained, followed by Connecticut at 16.8 percent. The average income of people leaving was 14.6 percent greater than the Illinois average. In New Jersey, the average income of levers was 13.4 percent greater than the state average (Figure 7).

Wyoming residents had the largest income differential relative to newcomers, at 32.6 percent. In Alaska, new migrants had average incomes 25.9 percent below the state average and in Hawaii, new migrants had average incomes 22.0 percent below the state average. The fourth and fifth lowest newcomer incomes were in South Dakota, 21.9 percent below the state average and North Dakota, 21.1 percent below the state average (Figure 8)



New Results Track Old

There is a striking similarity between the domestic migration results for 2013-4 and those reported by the Census Bureau population estimates program from 2000 to 2013 (no data for 2010). Among the top 10 gainers in net domestic migration in 2013 to 2014, nine were also among the top 10 gainers between 2000 and 2013. These included Texas, Florida, South Carolina, Colorado, Washington, Arizona, North Carolina, Oregon and Nevada. Georgia was replaced by Oregon in the IRS 2013 to 2014 list.

However in the earlier period, Florida was the leading importer of people, while Texas, now number one, ranked second. However, Florida could challenge Texas in the future, if that state's in-migration numbers suffer substantially from the oil bust. Net domestic migration continues to focus on the South and West, with each region accounting for five of the top 10 states.

There is also similarity among the largest exporters of people, though somewhat less so. Among the top five domestic migrant exporters, four ranked in the top five between 2000 and 2013. New York, California, Illinois and New Jersey appeared in both lists, while Pennsylvania replaced Texas in the 2013-2014 IRS data.

Among the 10 greatest losers in net domestic migration, five were in the Northeast, three were in the Midwest, one was in the South and one in the West.






RESIDENTS & DOMESTIC MIGRANTS: ANNUAL INCOME: 2014 State  All Out-Migrants In-Migrants Net Domestic Migration State Attraction Ratio (In-migrants per 100 out-migrants) Alabama $26.0 $23.3 $23.1           (3,800)                     96.1 Alaska $35.8 $26.5 $24.8           (7,800)                     80.1 Arizona $28.7 $28.3 $31.4          22,900                   113.8 Arkansas $26.0 $22.0 $22.3           (4,400)                     93.2 California $36.1 $43.2 $38.8         (57,900)                     88.5 Colorado $36.0 $32.7 $33.3          29,500                   119.9 Connecticut $50.1 $56.0 $53.7         (17,500)                     78.3 Delaware $32.9 $33.9 $34.4            1,700                   106.2 District of Columbia $56.9 $53.9 $46.7           (4,400)                     89.7 Florida $32.9 $28.7 $42.9        114,400                   126.7 Georgia $28.0 $25.4 $25.2          13,900                   105.6 Hawaii $31.0 $24.1 $27.8           (4,000)                     93.0 Idaho $25.3 $22.1 $25.3            6,000                   112.8 Illinois $34.8 $39.8 $34.3         (82,000)                     67.2 Indiana $27.3 $27.1 $25.0           (6,000)                     94.8 Iowa $30.5 $27.4 $24.4           (2,500)                     95.7 Kansas $31.1 $25.2 $27.1         (11,000)                     87.3 Kentucky $26.1 $24.3 $23.2           (7,800)                     91.5 Louisiana $28.9 $25.8 $25.2           (8,000)                     90.9 Maine $29.6 $35.5 $35.0            1,500                   106.3 Maryland $38.9 $38.5 $31.2           (3,000)                     98.0 Massachusetts $46.3 $45.3 $45.7         (19,200)                     84.3 Michigan $29.9 $30.8 $30.8         (24,200)                     82.6 Minnesota $35.8 $39.8 $32.0           (9,000)                     89.9 Mississippi $23.0 $20.8 $20.3           (8,200)                     87.6 Missouri $29.4 $27.5 $26.7           (7,200)                     94.2 Montana $29.5 $26.0 $28.8            3,300                   111.9 Nebraska $30.6 $28.0 $23.7           (2,400)                     94.2 Nevada $30.9 $27.6 $33.2          15,700                   117.0 New Hampshire $38.0 $38.2 $43.3            1,000                   102.9 New Jersey $42.6 $48.3 $42.0         (46,000)                     75.9 New Mexico $25.9 $25.4 $25.7           (9,800)                     84.6 New York $42.7 $44.6 $45.0       (126,800)                     65.4 North Carolina $28.1 $26.4 $29.3          20,900                   108.9 North Dakota $38.8 $30.6 $25.8            5,600                   120.2 Ohio $29.9 $32.3 $28.8         (18,300)                     89.2 Oklahoma $29.1 $24.7 $22.9            3,300                   104.1 Oregon $31.2 $28.7 $30.4          18,700                   122.3 Pennsylvania $33.7 $37.2 $34.1         (27,500)                     86.4 Rhode Island $34.8 $35.5 $34.5           (3,900)                     85.1 South Carolina $26.8 $24.9 $31.8          30,100                   127.3 South Dakota $31.5 $24.6 $28.3              (400)                     98.5 Tennessee $27.5 $25.0 $27.9          16,400                   111.2 Texas $31.7 $30.6 $27.4        229,300                   156.3 Utah $26.4 $23.2 $27.1           (2,800)                     96.1 Vermont $32.2 $37.6 $33.6           (1,200)                     92.4 Virginia $37.0 $34.4 $32.5         (25,300)                     90.1 Washington $36.0 $30.5 $32.6          27,000                   116.4 West Virginia $25.6 $24.8 $23.7           (3,700)                     90.0 Wisconsin $31.5 $32.0 $29.8         (10,300)                     88.6 Wyoming $40.2 $27.1 $30.9           (1,400)                     94.9 United States $33.4 $33.0 $32.4 Income in 000s Data from IRS Gross Migration File (https://www.irs.gov/uac/soi-tax-stats-migration-data-2013-2014)

Wendell Cox is principal of Demographia, an international pubilc policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the "Demographia International Housing Affordability Survey" and author of "Demographia World Urban Areas" and "War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life." He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Notes From An Upzoning Heretic

Wed, 08/10/2016 - 22:38

I recently got into a discussion on Twitter about the soundness of upzoning, or the increase in the allowance of residential units in cities, as a rational and reasonable response to the lack of affordable housing in our nation's large cities.  Anyone who's been reading my writing knows that I've disagreed with this for quite some time, and tried many ways to articulate my views and reach some understanding. From the discussion I learned two things: 1) Twitter is a really poor vehicle for debate when nuance is critical (OK, I really knew that already), and 2) the orthodoxy of the upzoners is so strong that my views on this might put me on the pariah end of the urbanism spectrum. 

It started innocently enough.  Ramsin Canon suggested upzoning major streets in Chicago for more residential units.  That brought several supporters, including City Observatory writer and fellow Chicago blogger Daniel Kay Hertz, who (gracefully, I might add) noted my objections.  I then chimed in, and shortly thereafter I found myself swimming against the tide of upzoners hoping to prove that upzoning helps improve housing affordability. 

Look, upzoners, I understand the problem and the sentiment.  I understand the desire to find the right policy response to address the issue.  But I remain unconvinced that upzoning will help any more than a handful of American cities.  Here's why.

An Abstract Argument

Surely a big part of the appeal of upzoning is its abstract simplicity.  Increasing the supply of housing units in extremely tight housing markets can unleash market forces that drive home prices and rents downward, making cities more affordable to affluent and poor alike.  And in housing markets that have an almost even distribution of high priced housing within them, like San Francisco or New York, this makes sense.  Allowing more units will have the effect of bringing prices down.  (I'd also add parenthetically that the tightest and most expensive housing markets nationally also tend to be the most geographically constrained, by either water or mountains, and that constraint does not hold for all cities nationwide.  This escapes many people.)

The reality, however, is that nationally gentrification is just a pittance compared to the expansion of urban poverty.  As Carol Coletta of the Knight Foundation put it in a speech last month at the Congress of the New Urbanism:

"In 1970, about eleven hundred urban Census tracts were classified as high poverty.

By 2010—40 years later—the number of high poverty Census tracts in urban America had increased from 1100 to more than 3,000. (3165)

The number of people living in those high poverty Census tracts had increased from 5 million to almost 11 million. And the number of poor people in high poverty Census tracts had increased from 2 million to more than 4 million.

So over a 40-year period, the number of high poverty Census tracts in America’s core cities had tripled, their population had doubled, and the number of poor people in those neighborhoods had doubled.

Given that record, I’ll bet a lot of people are hoping for a little gentrification– if gentrification means new investment, new housing, new shops without displacement.

The idea that places might benefit from gentrification runs against the popular narrative. But here’s the really startling fact: only 105 of the eleven hundred Census tracts that were high poverty in 1970 had rebounded to below poverty status by 2010. That’s only ten percent! Over 40 years!"

Most American cities are not like San Francisco or New York, where the high prices and rents cannot be avoided and the return-to-the-city demand remains very high.  Most cities have greater variance in prices and rents, from very high to very low.  This takes away the first layer of abstraction for prices and rents and allows those with money to rationally widen their consideration when choosing to live in cities.  On the surface this sounds great. 

But -- and this is where the second layer of abstraction is shed -- people don't make housing decisions or neighborhood decisions rationally.  They take in all sorts of information and put it to subjective use, and justify its rationality later.  Historical perceptions of neighborhoods linger far longer than their reality.  Media perceptions can distort the reality of neighborhoods.  Egos can get involved and people select neighborhoods that have a certain cache or brand.  For urban neighborhoods in most cities, we find that affluence clusters in certain areas and moves outward slowly.  Poverty expands quickly, as those who have the ability to escape it do so, and further destabilize a neighborhood in the process.  The end result, again for cities that do not have the same strong return-to-the-city demand or the uniformly high home prices and rents, is affluent enclaves surrounded by expansive and increasingly impoverished neighborhoods.

Upzoning can accelerate this process.  If a major city undergoes an upzoning process and allows a substantial increase in the number of housing units, what do you think the development community's response to that will be?  My guess is that they will work hard to fulfill the market demand where the demand is strongest -- in the most desirable neighborhoods or in the areas immediately adjacent to them.  Only after that demand is tapped out will developers move into other areas, and most will elect to build in areas that are adjacent to the newly saturated neighborhood.  Those who live in the path of development will see prices and rents remain high; those away from the path of development will likely see  prices and rents crater, and lament the lack of investment in their community. 

The Need for Investment

TAt one point in the Twitter discussion.  Daniel Kay Hertz asked me, "Would there be more or fewer Latinos in Logan Square if there was more new housing in Lincoln Park?"  For non-Chicagoans, Logan Square is the rapidly gentrifying neighborhood immediately west of the quite-gentrified Lincoln Park neighborhood on the lakefront.  My response was that Logan Square would indeed have more Latinos in that scenario and that it would have no discernible impact on other neighborhoods outside of the "hot zone" as well.  But that sets up the scenario I cite above -- an affluent neighborhood next to an eternally poor/working class one, possibly lamenting the lack of investment in their midst.  And the further one's home or neighborhood is from the "hot zone", the more that lament turns into angst, frustration and resentment.

It's worth bringing back a portion of the quote above from Carol Coletta:

Given that record, I’ll bet a lot of people are hoping for a little gentrification– if gentrification means new investment, new housing, new shops without displacement.The idea that places might benefit from gentrification runs against the popular narrative.

Despite the growing problems of affordability in select neighborhoods in major cities across the nation, there are many more neighborhoods that wish they had that problem.  Many people rue the fact that maybe one-quarter or one-third of a city is priced beyond their means.  That leaves two-thirds to three-quarters of a city to explore and find a place worthy of investment.  Upzoning can have the impact of further concentrating development within the "hot zone" and drive a deeper inequality wedge between urban haves and have-nots.

Upzoners are not doing cities a favor more broadly by addressing an issue that helps them directly.

Ultimately I see high prices and rents as being demand-driven and not supply-driven.  Prices and rents are high because there are too many people focusing on too few neighborhoods -- and squandering the opportunity to take some of that investment to other neighborhoods that could use it.

Pete Saunders is a Detroit native who has worked as a public and private sector urban planner in the Chicago area for more than twenty years.  He is also the author of "The Corner Side Yard," an urban planning blog that focuses on the redevelopment and revitalization of Rust Belt cities.

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