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Is California’s Economy Swell?

Mon, 01/18/2016 - 21:38

Every now and then, something happens to cause California’s comfortable establishment to celebrate the state’s economy.  Recent budget surpluses and jobs data have provided several opportunities, never mind that these are hardly summary statistics.  They don’t tell the complete story.

The celebrants conveniently ignore California’s nation-leading poverty, huge inequality, persistent negative domestic migration, and the fact that with about 12 percent of the nation’s population, California is home to about 30 percent of the nation’s welfare recipients.

A recent Next 10 report, prepared by Beacon Economics, has provided another opportunity for celebration.  The Los Angeles Times’ coverage of the report is here.  Their reporter, Chris Kirkham, provides a straight-forward summary, including charts not in the original report and quotes from people who might not be expected to be mindless cheerleaders.  Full disclosure: He tried to interview me, but I was unavailable.

My favorite coverage was a celebratory piece at The National Memo, by one Froma Harrop, titled High Taxes, Regulations, and a Swell Economy.  Try telling the children of one of the several families living in a single-family home, children with little prospect of ever living a middle-class lifestyle, that California’s economy is swell.  Try telling that to the huge numbers of long-term unemployed in California’s Central Valley, or one of the many people who, like Martin Saldana, have been poorly served by California’s swell economy.  California’s economy might be swell, but only for a portion of the population.

Harrop, and apparently large numbers of California’s comfortable establishment, don’t appear to care much about their less-fortunate fellow citizens.  She’s channeling Marie Antoinette when she says “OK.  Those who can’t pay the price—or who want bigger spaces—can and often do consider other parts of the country.”

Right.  What about all the people who provide services to California’s wealthy coastal residents in places like Monterey and Santa Barbara?  What about counties like Napa and Ventura that insist, by law, that land be set aside for agriculture, an industry that employs thousands, but can’t survive and pay wages that would allow a respectable standard of living in these high-cost counties?

This time the celebration turns out to be about nothing.  The Next 10 report is seriously flawed.  The first hint of weakness is on the first page of the actual report, page 4 of the document, where they say “This analysis is trying to show….”  Serious analysis attempts to answer questions, not support a pre-conceived opinion.

The next clue is Table 1.  In a report filled with time series, the authors present data on one point in time, say that California has the fourth highest net job growth rate, and conclude all is good.  Why would they do that?  Could it be that the time series doesn’t support the narrative?

Actually, they used the only recent year where California performed significantly better than the United States.  Here’s the data in time series.  It’s similar to a chart in the Los Angeles Times’ piece.  We compare California’s net job creation rate with that of the United States:

Doesn’t look so spectacular, does it? 

Maybe the rankings would look better?  Below is a chart of California’s ranking going back to 1977.  Remember, one is good, 50 is bad:

The narrative isn’t supported here either.  California has only ranked in the top 20 twice since 2006, and over that time it’s been in the bottom 20 three times.  Indeed, California has been in the top ten only once since 2001.  That was the data point they used in their analysis.

The report has other weaknesses.

Consider the charts 4a through 4f.  Combined, they purport to show that for California, firms of all ages were net job creators every year.  There is no year where they show firms of any age group having net job losses.  Given the well-documented massive California job losses in the past few recessions, this is simply unbelievable. 

Indeed, a close look at the charts yields apparent internal inconsistencies.  Chart 4e is an example.  In 2002, 2009, and 2010 job destruction rates were far greater than job creation rates, but somehow they report that net job creation rates managed to remain positive in each of these years?  For the record, we built a chart using aggregate data that show net job loss rates for all California establishments of -2.2, -5.8, and -3.1 for the years 2002, 2009 and 2010, respectively:

California’s apologists don’t do themselves any favors by resorting to such shoddy and misleading work.  California has had some good job years recently.  It also has some huge strengths.  These include a world-leading venture capital infrastructure, a world-leading climate, and a fantastic location between Asia and the massive American consumer market.

California has some huge challenges too, including the poverty, inequality, and limited opportunity for minorities.  Ignoring these challenges and exaggerating the state’s strengths is a guarantee that California will never be the land of opportunity that it was --- or could be.

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.

Around The World, The Tide Is Turning Against Megacities

Sun, 01/17/2016 - 21:38

The massive construction waste collapse last month in Shenzhen reflects a wider phenomenon: the waning of the megacity era. Shenzhen became a megacity (population over 10 million) faster than any other in history, epitomizing the massive movement of Chinese to cities over the past four decades. Now it appears more like a testament to extravagant delusion.

In 1979, Shenzhen was a small fishing town of roughly 30,000 people when it became a focus of former Chinese leader Deng Xiaoping’s first wave of modernization policies. Now it is a metropolis of 12 million whose population grew 56 percent between 2000 and 2014. For years, it stood as the brash wunderkind of Chinese cities, proud of its gleaming infrastructure that is now increasingly suspect.

The Shenzhen collapse came four months after a similar deadly public safety disaster in Tianjin, another relatively new megacity, where an explosion at a chemical warehouse killed 173 people. And of course, there is the widespread urban air pollution that is hazardous in Beijing and simply noxious elsewhere. Simply put, the once compelling “economies of scale” offered by increasing the size of cities have broken down in urban agglomerations over 10 million people, where their size has now become encumbrances to further growth, not to mention the happiness and health of their citizens.

One big problem with megacities, the Chinese are discovering, is their impact on property prices and fertility. Chinese may have been freed last year from the tyranny of the one-child policy, but don’t expect a baby boom in any of the biggest, most glamorous cities. Shanghai has among the lowest fertility rates in the world, one-third of the replacement rate. Beijing and Tianjin suffer a similarly dismal fertility rate.

This reflects both crowded conditions and insanely high property prices that, on an income-adjusted basis, now are far higher than those in expensive world cities like Vancouver, London, Sydney, San Francisco and New York — two times higher in some cases.

The population growth rate in Beijing and Shanghai has dropped dramatically since 2010, according to  demographer Wendell Cox. The population of China’s capital expanded 3.9 percent a year from 2000 to 2010; growth slowed to 2.3 percent annually from 2010 to 2014. In Shanghai the population growth rate for the same periods slowed from 3.4 percent annually to 1.3 percent. High degrees of pollution have led at least some affluent urban Chinese to move back toward the countryside, as well as to cleaner, less congested regions in Australia, New Zealand, and North America.

Nonetheless, the Chinese government remains committed to driving further urbanization to boost economic growth, aiming to turn more rural farmers into city-dwelling, free-spending consumers. In 2014 the government set a goal to increase the ratio of the Chinese population that lives in cities to 60% by 2020 from 53.7% then. But  the urbanization strategy aims to funnel migrants to small and midsize cities with less than 5 million residents, maintaining tight restrictions on legal migration to the megacities.

To make the smaller cities more attractive Beijing promised to ramp up infrastructure spending, and local governments have rolled out housing subsidies, tax breaks and cheaper mortgages to lure migrants. Whether that will be enough to counteract the pull of the megacities’ bigger job markets is an open question.

Peak Megacity In Much Of The World

Until recently the worldwide trend toward megacities — there were 34 in 2014 — has seemed relentless. But in much of the world this trend is slowing down. The populations of Europe and North America are growing slowly, with the exception of London and Moscow. In the last decade the population of New York City grew at roughly one third the relatively low national rate.

Where megacities can be expected to grow in the future are in the backwaters of the global economy, in Africa and parts of Asia, where the most rapid population growth and urbanization is taking place.

In an impressive 2011 study, the consultancy McKinsey predicted that through 2025, population growth would shift to 577 “fast-growing middleweight” cities many of them in China and India, while, in contrast, megacities would underperform economically and demographically.

In India as well, population growth rates have slowed considerably for two of its three largest cities, Mumbai and Kolkata, while New Delhi has become the country’s largest megalopolis. More rapid population growth has taken place in mid-sized cities such as Hyderabad, Pune, Chennai, and Bangalore, as well as in smaller cities like Coimbatore, home to 2.5 million, that have seen much of the industrial and tech growth in the country.

Urban decentralization has become something of a theme of the government of Prime Minister Narendra Modi, who implemented a program of “rurbanization” as Chief Minister of the state of Gujarat. Villages are still home to the vast majority of Indians and serve as the primary source of new urban migrants. Modi speaks of human settlements with the “heart of a village” and developing “the facilities of the city.”

Singapore-based scholar Kris Hartley notes a shift of industrial and even service businesses to more rural locales in Southeast Asian countries like Thailand, Vietnam and Indonesia, and parts of China. As megacities become more crowded, congested, and difficult to manage, Hartley suggests, companies in these areas are finding it more convenient, less costly, and better for the families of their employees to locate farther from giant cities.

Where Megacities Will Grow Fastest

According to U.N. estimates, 99 percent of all population growth between 2010 and 2100 will take place in developing countries, some 83 percent in Africa alone followed by 13 percent in Asia, particularly the less developed parts.    

Rather than an indicator of the future, megacity growth in these regions increasingly is something of a lagging indicator of an early phase of urbanization. Growth projections suggest the evolution of two more megacities in Africa: Johannesburg-East Rand (South Africa) and Luanda (Angola).  They will join Lagos in Nigeria, as well as the rapidly growing and poor megacities Cairo and Kinshasa, as well as Karachi in Pakistan

As is the case in India, these cities will likely be most prolific in producing slums. Worldwide there are now as many as a billion denizens of these depressed areas, threatening the social stability of not only of their countries but also the world, as they tend to generate high levels of both random violence and more organized forms of thuggery, including terrorism.

One does not have to be a Gandhian idealist to suggest that perhaps dispersion, not concentration, provides a better model for future urban growth in developing countries, offering more space, privacy, and connection to nature, note social scientist Robert Obudho. A focus on large city development, he argues, will exacerbate problems, while shifting toward smaller-scale areas could encourage more “self-reliance, spatial equity, [and] local participation.”

Ultimately, a shift toward dispersion—both within regions and between them—has been made more feasible in the developing world, as in the West, by new technology. Smaller cities and even villages are no longer as economically isolated and are brought closer to the outside world through the use of cell phones and the Internet. Economic growth in these places could help stem megacity migration by closing the gaps in living standards of rural people relative to their urban counterparts, as has occurred in western countries.

Such ideas need to be heard more in the discussion about cities in the developing world. We need to confront the urban future with radical new thinking. Rather than foster an urban form that demands heroic survival, we should focus on ways to create cities that offer a more prosperous, healthful and even pleasant life for their citizens.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Photo: Shenzhen:  Binhe Avenue from the Shun Hing Tower (by Wendell Cox)

China's Navy: A Maritime Power?

Fri, 01/15/2016 - 21:38

When China’s navy looks beyond its coastal waters, which it increasingly does, it sees a kind of Great Wall. The Chinese call this the “First Island Chain,” a line of islands, some small, others huge, extending from the Japan archipelago to the north, the Ryuku island chain past Taiwan, and the Philippines to the south. The waters within this arc are considered an integral part of China itself.

Increasingly, China’s sailors are penetrating this barrier through various choke points to gain access to the broader Western Pacific Ocean. In late November, a large formation of Chinese long-range bombers and support craft passed through the gap between Okinawa and the island of Miyako, the so-called “Miyako Channel".

The Miyako Channel is strategically vital for China because it is one of the few international waterways through which the Chinese navy and air can access the Pacific Ocean without violating somebody’s space. It is also located close to the Japanese-controlled Senkaku islands which are also claimed by China.

The first time a Chinese H-6K bomber passed through the channel was September, 2013; the first multi-plane formation to use this passageway was in May this year, and late this year an unusually large formation of eight bombers and support aircraft passed through the gap, flew around the Pacific, and then returned to home base through the channel.

The H-6K is a modified and much improved version of an old Soviet Tu-22 bomber, known as a “Badger”. It has been configured to hold cruise missiles under its wings or in its bomb bay. The planes reportedly flew about 620 miles into the Pacific before returning to their home base near Shanghai.

Both the Chinese navy and the air force are learning to conduct extended maritime operations far from home waters and into the wider Western Pacific. Of course, China has maintained a permanent, rotating flotilla of two destroyers and a supply ship in the waters off the coast of Somalia and the Gulf of Aden since 2009. Unlike Japan, it does not have a permanent base in that region, although it is seeking one.

In March, 2014, two Chinese warships docked at Abu Dhabi, the first time a Chinese fleet had made a port call on the Arabian Peninsula since the days of the Treasure Ships of Admiral Zheng He. In 2013, the Chinese navy made its first goodwill visit to South America, and it stationed a guided missile frigate in the Mediterranean to help escort ships removing chemical weapons from Syria.

These missions are not war fighting, but the ships have enhanced capabilities for operating in seas far from home. They have gained experience in coordinating with other naval services on anti-piracy patrol, and exercised with other navies, including those of South Korea and Pakistan.

In the summer of 2013 a Chinese naval flotilla passed through the Soyu Strait, which separates Hokkaido from the southern tip of Russia’s Kurile islands; they returned to their home base through the Miyako Channel. The People’s Daily trumpeted this maneuver as if it were a major triumph. Never mind that these narrow waters are international passageways or that they could easily be closed off if the Japanese decided to do so.

China routinely conducts naval and air exercises beyond the First Island Chain as far away as the Philippine Sea, and the number of Chinese naval flotillas passing through the First Island Chain has increased significantly in recent years. There were two in 2008 and 2009, four in 2010, five in 2011, and eleven in 2012. In 2012 surface combatants were deployed seven times to the Philippine Sea; they were deployed nineteen times in 2013. The Maneuver-5 exercise in the Philippine Sea involved units from all three of China’s fleets, its largest open-ocean exercise to date.

The Chinese navy has now penetrated all of the Western Pacific choke points along the chain, from the Tsuruga Strait separating Hokkaido from Honshu in northern Japan to the Bashi Strait separating Taiwan from the Philippines and the Sunda Strait in Indonesia. In October, 2012 a flotilla exited the East China Sea through the narrow passage way between Taiwan and Japan’s Yonaguna island in the Ryukyu chain (where the Japanese army has constructed a surveillance radar).

This is thought to have been a signal from Beijing of displeasure over Tokyo’s decision to buy the Senkaku islands a month earlier. Later, two Sovremnny Class destroyers and two frigates exited the chain through the Miyako Strait and returned via the waters separating Yonaguna from Taiwan.

The navy has steadily progressed from a handful of vessels, to multi-fleet (i.e. elements from all three of China’s fleets), to combined operations with submarines, drones and long-range bombers. Not only does China maintain a permanent anti-piracy force in the Indian Ocean, it now routinely conducts naval exercises and operates beyond the First Island Chain, says the US National Defense University.

This year China was invited to participate in the Rimpac exercise in waters near Hawaii. It sent a destroyer, but also an intelligence-gathering ship, making it possibly the first time a nation spied on an exercise in which it was a participant.

When queried as to its purpose and intentions of these missions, Beijing has a standard reply: “The training is in line with the relevant international practices and is not aimed at any one country or target and poses no threat to any country or region.”

In June, 2015, Beijing issued a white paper on its defense priorities in which it stated what has been obvious to any naval planner paying attention: that China's naval interests are no longer limited to its coastline, but span the globe. “The traditional mentality [going back to Mao Zedong] that the land outweighs the seas must be abandoned,” the paper states.

That the Chinese navy will enhance its capabilities for “open seas protection” just puts into words what is actually happening. The white paper leaves little doubt that China is intent on transforming itself into a modern maritime power, capable of challenging Japan or the US in Asia and elsewhere.

Todd Crowell is the author of The Coming War, published by Amazon as a Kindle Single.

First Island Chain (perimeter marked in red) map by Suid-Afrikaanse (GFDL) via Wikimedia Commons

America's Next Boom Towns: Regions to Watch in 2016

Thu, 01/14/2016 - 07:19

Which cities have the best chance to prosper in the coming decade? The question is a complex one, and as the economy changes, so, too, will the best-positioned cities.

To identify the cities most likely to boom over the next 10 years, we took the 53 largest metropolitan statistical areas in the country (those with populations exceeding 1 million) and ranked them based on eight metrics indicative of past, present and future vitality. We factored in, equally, the percentage of children in the population, the birth rate, net domestic migration, the percentage of the population aged 25-44 with a bachelor’s degree, income growth, the unemployment rate, and population growth.

The results show two divergent kinds of ascendant cities. One is driven by the tech industry, the in-migration of educated people and sharply rising incomes; the other type is what we describe as “opportunity cities,” which tend to have a diverse range of industries, lower costs and larger numbers of families. We may be one country, but the future is being shaped by two very different urban archetypes.

The Lone Star Model

The most vital parts of urban America can be encapsulated largely in one five-letter word: Texas. All four of Texas’ major metro areas made our top 10. Austin, Houston, Dallas-Ft. Worth and San Antonio are very different places, but they all have enjoyed double-digit job growth from 2010 through 2014, well above the national average of 8.1%. They also all have posted income growth well above the national average.

But the biggest divergence from the pack may be demographics. The Texas cities have become major people magnets, with huge growth in their populations of young, educated millennials and households with children. The clear star of the show is No. 1-ranked Austin, which has become the nation’s superlative economy over the past decade.

Austin leads the pack in terms of population growth, up 13.2% between 2010 and 2014, in large part driven by the strongest rate of net domestic in-migration of the 53 largest metropolitan areas over the same span: 16.4 per 1,000 residents. The educated proportion of its population between 25 and 44 is 43.7%, well ahead of the national average of 33.6%, although somewhat below the traditional “brain center” cities of the Northeast and the West Coast.

The other Texas cities also do well across the board, with strong domestic in-migration, low unemployment and a rising population of young families. The biggest question marks going ahead involve No. 6 Houston, which benefited heavily from the energy boom and now is dealing with the consequences of the oil price collapse. Most economists do not see a total meltdown as occurred in the 1980s, but it would not be a surprise to see Houston fall out of our top 10 until energy prices recover. Economist Patrick Jankowski projects some 9,000 layoffs in the energy sector locally in 2016 but enough growth elsewhere — for example 9,000 new jobs in medical services — to keep employment expanding, although far below the pace of the last few years. The other, less energy-dependent Texas metro areas seem likely to continue their stellar performance.

The Flyover Superstars

There are several dynamic, fast-growing metro areas elsewhere in the country that seem likely to increase their status in the coming years, mostly in the Southeast and the Intermountain West. Like the Texas cities, these areas enjoy lower costs than the Northeast or California, notably for housing, and tend to be pro-business. All are experiencing significant population growth.

No. 2 Salt Lake City and No. 4 Denver have been expanding for years, with significant tech-sector growth. Both are logging population increases, with Denver benefiting from strong domestic in-migration while Salt Lake City has the highest birth rate among major metro areas, 16.9 per 1,000 women from 2010-14, largely due to its fecund Mormon population.

The Southeast has a number of ascendant cities led by No. 5 Raleigh, which, like Austin, has emerged as a tech hot-spot. Some 49% of all Raleigh residents aged 25 to 44 have a four-year degree, higher than any other metro area in the South. The national average is 33.6%.

The Glorious Gated Community

Unlike the rest of our rising cities, the Bay Area’s two major metro areas — No. 3 San Jose and No. 9 San Francisco — do not boast rapid population growth, and have low rates of family formation and births. Yet the area’s technology domination has made it so rich that it blows by most regions in terms of positioning for the future.

The big divergence here is income growth. Since 2010, the two metro areas have enjoyed the strongest expansion in earnings in the nation – 9.2% in the San Jose area between 2010 and 2015 and 7.8% in San Francisco. Silicon Valley and the Bay Area also boast extraordinarily well-educated young workforces. In San Jose 53.5% of workers aged 25 to 44 have a college degree, the third-highest share in the nation, and San Francisco ranks fourth at 52.4%.

So why are people not flocking to these areas? San Jose is net negative for domestic migration over the time we examined while San Francisco made modest gains only after years of net out-migration. Much of the problem lies in high housing prices, which, notes Dartmouth College economist William Fischel, have turned the Bay Area and the Valley into an “exclusionary region” inaccessible to all but the wealthy and highly gifted.

Given the growing importance of the technology industry, it seems likely that this gated region will continue to thrive in the years ahead, albeit with a low level of new family formation, relatively few children and a limited middle class. It’s a model that some cites may wish to duplicate but few will be able to. Perhaps the most promising candidate to join this list is No. 15 Seattle, which also has experienced strong job growth, largely from technology and boasts a large population of college graduates.

The Fading Big Enchiladas

Perhaps the most glaring omissions at the top of our list are America’s three largest metropolitan areas: New York, Los Angeles and Chicago. Of the three, New York does best, but only well enough for 36th place, hardly what one would expect for America’s, and arguably the world’s, premier city.

New York has high costs like San Francisco but a far more bifurcated economy and demographics. Wall Street may be approaching the end of an epic run, but overall incomes in New York have fallen 0.5% since 2010. Employment has expanded a respectable 7.3% over the past five years, roughly the national average, but the metro area has the highest rate of domestic out-migration in the country.

Similar dynamics have lowered future prospects for Los Angeles and Chicago. Ranked 39th, Los Angeles has posted better job growth than New York at 10.2%, but its income losses were also more severe, down 3.8%. As in Gotham, the elites of Southern California in entertainment, real estate and technology may be thriving, but the vast majority are not doing so well, as manufacturing, construction and business services have lagged. Los Angeles’ population — more heavily Latino and African America — is also less well-educated, with only 34.8% of adults 25 to 44 holding bachelor’s degrees, a good 20 points less than their San Francisco-area competitors.

Chicago, ranked 40th, appears to have worse prospects. For all its problems, Los Angeles still dominates entertainment, has the largest port in the country, close Pacific Rim connection and enjoys the finest weather on the continent. Chicago has none of those advantages, although it boasts a very attractive downtown. The region around the magnificent mile is not doing well, with low job and population growth, stagnant incomes and strong out-migration. Urban analyst Pete Saunders describes Chicago’s economy as “one-third San Francisco and two-thirds Detroit.” That seems more true than many Windy City boosters would like to admit.

Future Of The Future

Of course the future is not completely predicable and many things could change in the coming years. In the short run, as mentioned above, the energy boom towns will take a bit of a hit. Energy slowdowns could impact other cities with a concentration in this industry, notably Denver, Salt Lake and even Columbus, near Ohio’s big natural gas and oil reserves.

But other factors suggest that these lower-cost cities will do well into the future. Columbus, Ohio, for example, may see its  job growth impacted, but the benefits of strong in-migration will linger, particularly the growing numbers of college-educated millennials who have headed to it and other more affordable Rust Belt metro areas in recent years.

Ultimately we may see the emergence of two distinct urban futures. One will emerge in elite “gated” regions such as San Francisco, San Jose, and, perhaps in the near term, Seattle. These areas will dominate many key tech sectors, and will continue to leverage their well-educated populations. The other will be more along the Texas model, diversified economies driven by lower costs, particularly for housing, diversified economies and increasingly well-educated populations.

Rather than being fundamentally incompatible, this enormous country should have room for both models. America needs its elite centers, but there also have to be cities for middle-class families. Each can claim a piece of the future.











2016 Regions to Watch Index Rank Region (MSA) Score Children age 5-14, 2014 Job Growth, 2010-2015 Popltn Change, 2010-2014 Earnings growth, 2010-2015 Domestic Mig rate 2010-2014 Birth rate, 2010-2014 Bachelor's degrees, Age 25-44, 2014 Unemplymt, Nov 15 1 Austin 75.6 13.7% 19.1% 13.2% 1.5% 16.4 13.8 43.7% 3.3% 2 Salt Lake City 66.3 16.2% 14.8% 6.0% 2.1% -0.1 16.9 31.2% 2.9% 3 San Jose 65.6 13.1% 21.3% 6.3% 9.2% -1.8 13.1 53.5% 3.9% 4 Denver 63.2 13.6% 15.0% 8.3% 0.8% 9.3 13.1 43.9% 3.2% 5 Raleigh 63.1 14.7% 15.4% 10.0% -1.6% 11.0 12.9 49.0% 4.6% 6 Houston 63.0 15.2% 15.2% 9.6% 3.8% 7.4 15.0 32.5% 4.9% 7 Dallas 61.1 15.2% 15.0% 8.2% 0.7% 6.6 14.4 33.4% 4.0% 8 San Antonio 58.6 14.5% 12.5% 8.7% 1.1% 9.9 14.1 27.6% 3.8% 9 San Francisco 56.6 11.4% 15.7% 6.0% 7.8% 2.9 11.7 52.4% 3.9% 10 Oklahoma City 56.2 13.9% 9.3% 6.7% 3.5% 6.8 14.5 30.4% 3.6% 11 Nashville 56.1 13.3% 14.8% 7.3% 1.7% 8.9 13.1 37.8% 4.3% 12 Charlotte 54.3 14.1% 15.4% 7.4% 0.9% 8.8 12.8 37.6% 5.1% 13 Minneapolis 52.1 13.6% 8.7% 4.4% -0.6% 0.1 13.3 44.9% 2.7% 14 Columbus 51.2 13.5% 10.8% 4.9% 0.7% 2.6 13.7 40.7% 3.9% 15 Seattle 50.9 12.2% 13.8% 6.7% 4.0% 4.3 12.8 43.1% 4.9% 16 Atlanta 50.8 14.6% 11.9% 6.2% 0.8% 3.5 13.3 38.2% 5.0% 17 Orlando 49.1 12.6% 16.6% 8.8% -1.5% 8.2 12.1 31.0% 4.5% 18 Grand Rapids 48.2 14.0% 20.0% 3.9% -2.2% 1.7 13.5 37.1% 5.2% 19 Phoenix 48.1 14.2% 12.9% 7.1% -2.1% 6.5 13.7 29.3% 5.0% 20 Indianapolis 47.9 14.3% 11.0% 4.4% -2.2% 2.1 13.8 36.4% 4.2% 21 Washington 47.8 12.9% 5.3% 7.0% -3.4% 0.4 13.8 53.2% 4.1% 22 Portland 47.5 12.7% 12.2% 5.5% 3.1% 5.1 12.1 38.9% 4.8% 23 Kansas City 45.8 14.2% 6.9% 3.1% -0.3% -0.3 13.6 39.5% 3.9% 24 San Diego 44.1 12.1% 9.6% 5.4% 1.9% 0.3 14.0 38.7% 4.8% 25 Boston 43.1 11.4% 8.4% 3.9% 2.2% -0.5 11.2 54.1% 4.1% 26 Cincinnati 39.4 13.6% 6.4% 1.6% 0.4% -2.1 12.9 37.0% 4.2% 27 Louisville 39.3 13.0% 10.2% 2.8% -1.2% 1.5 12.5 31.7% 4.2% 28 Riverside 39.0 15.0% 13.9% 5.1% -2.7% 1.6 14.1 18.8% 6.1% 29 Jacksonville 39.0 12.7% 9.0% 5.5% -2.4% 5.4 12.7 28.2% 4.7% 30 Richmond 38.3 12.7% 5.3% 4.3% -2.4% 3.1 12.0 38.1% 4.2% 31 Detroit 37.5 12.9% 12.0% 0.0% -1.6% -4.6 11.6 33.9% 3.0% 32 Sacramento 36.7 13.3% 8.3% 4.4% -0.6% 1.7 12.5 32.2% 5.5% 33 Tampa 35.8 11.5% 10.2% 4.7% -1.6% 6.4 10.9 31.3% 4.6% 34 Miami 35.0 11.4% 12.6% 6.5% -1.7% 0.9 11.4 31.3% 5.0% 35 Milwaukee 35.0 13.3% 4.9% 1.0% -1.0% -3.4 12.8 38.3% 4.4% 36 New York 35.0 12.1% 7.3% 2.7% -0.5% -6.3 12.7 44.8% 4.7% 37 Baltimore 34.9 12.4% 6.8% 2.8% -1.2% -0.6 12.3 43.9% 5.3% 38 Las Vegas 33.8 13.5% 13.6% 6.1% -6.5% 4.7 13.2 22.4% 6.3% 39 Los Angeles 33.7 12.5% 10.2% 3.4% -1.8% -3.6 13.0 34.8% 5.3% 40 Chicago 32.9 13.3% 6.5% 1.0% -0.1% -6.0 12.7 41.7% 5.4% 41 Birmingham 31.9 13.1% 5.5% 1.4% -1.1% -0.6 12.9 32.3% 5.2% 42 St. Louis 31.8 12.8% 4.2% 0.7% -0.4% -3.3 12.2 38.4% 4.6% 43 Philadelphia 31.6 12.4% 3.8% 1.4% -1.7% -3.0 12.1 41.7% 4.6% 44 New Orleans 31.2 12.6% 4.5% 5.2% -6.0% 4.7 12.7 33.4% 5.6% 45 Cleveland 30.1 12.3% 5.2% -0.7% 0.3% -4.3 11.2 34.5% 3.7% 46 Memphis 29.5 14.2% 3.6% 1.4% -0.8% -4.0 14.2 28.3% 6.1% 47 Pittsburgh 28.8 10.8% 3.9% 0.0% 2.6% 0.4 10.1 42.2% 4.5% 48 Virginia Beach 28.8 12.3% 1.0% 2.4% -1.2% -3.5 13.4 30.1% 4.6% 49 Tucson 25.3 12.3% 3.7% 2.5% -3.9% 0.1 12.1 29.1% 5.3% 50 Buffalo 25.0 11.6% 3.7% 0.1% 0.3% -2.3 10.6 36.8% 4.9% 51 Hartford 24.5 11.9% 5.5% 0.2% -1.6% -5.7 10.0 41.9% 4.8% 52 Rochester 23.9 11.9% 3.3% 0.3% -2.5% -3.9 10.8 36.6% 4.6% 53 Providence 23.3 11.5% 5.1% 0.5% -0.4% -3.2 10.4 33.2% 4.9%

Analysis by Mark Schill, Praxis Straetgy Group (mark@praxissg.com). The index incldues eight equally-weighted measures: share of population age 5-14, 5-year job growth, 5-year population change, 5-year real earnings growth, annual average domestic migration rate, annual average birth rate, share of young population with a bachelor's degree, and current unemployment rate.

This piece first appeared in Forbes.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Mark Schill is a community process consultant, economic strategist, and public policy researcher with Praxis Strategy Group.

SaltLake City photo by Skyguy414.

Migration is Back

Tue, 01/12/2016 - 21:38

The 2015 state population estimates, recently released by the Census Bureau, indicate that interstate annual migration has begun to surge again. Between July 1, 2014 to June 30, 2015, up to 0.24% of US residents have migrated, returning to levels not experienced since the early 2000s. Interstate migration was just below the 2004 level of 0.25%, but trailed the much higher 2005 and 2006 levels (0.31% and 0.42%). By 2011, after the devastation of the housing bust and the Great Financial Crisis, interstate migration fell to 0.13% (Figure 1). In 2015, 763,000 US residents made interstate moves, the fifth highest figure since 2000. This was well below the peak of 1,251,000 in 2007 and well above the trough of 412,000 in 2011.

Regional and Divisional Trends

As opposed to those who claimed the Recession changed migration patterns, it turns out that domestic migrants are moving to just about the same places they did before. They continue to move principally to the South and, to a secondary degree, to the West (2000-2009 and 2010-2015, no data for 2010). The South has gained 5.6 million domestic migrants, followed by 0.8 million in the West. The Northeast has lost 3.7 million domestic migrants, while the Midwest has lost 2.7 million (Figures 2 & 3).

However, these regional trends mask important differences that have occurred at the division level within the regions (Figure 4). By far the most net domestic migration has been to the South Atlantic division, which stretches along the Atlantic coast from Delaware to Florida and includes West Virginia (Figure 4). The South Atlantic has added 3.8 million net domestic migrants since 2000. This is approximately double the 1.9 million gain of the Mountain division, which includes Western states that do not have a Pacific coast. The West South Central division, which includes Texas, added 1.4 million net domestic migrants, while the East South Central division, stretching from Alabama and Mississippi to Kentucky added 400,000 net domestic migrants. There were net domestic migration losses in the other divisions, including the Middle-Atlantic (New York, Pennsylvania and New Jersey), the East North Central (Ohio to Wisconsin), the Pacific (including California) and the West North Central (the Great Plains).

With its smaller population, the largest percentage gain in population from net domestic migration occurred in the Mountain division at nearly 15%. There were lesser gains in the three divisions of the South. The largest net domestic migration percentage losses were in the Middle-Atlantic, New England and East North Central divisions. The net domestic migration percentage losses were less in the Pacific division and least in the West North Central division (Figure 5).

In 2014, Northeast and the Midwest had only one state that added domestic migrants: North Dakota. Of course, with the present difficulties in the oil industry, it would not be surprising for North Dakota to fall back into its more familiar pattern of domestic migration decline in 2016. In every year since 2000, the East and Midwest have lost net domestic migrants in the aggregate. The South has gained in every year and the West in all years but one.

Out of the four divisions in the North East and Midwest, only the West North Central division has had a (single) positive year in net domestic migration in the 2000s. Similarly, the Pacific division has had only one positive net domestic migration year in the 2000s. The situation is virtually the opposite in the remaining divisions. The South Atlantic division and the Mountain division have both added net domestic migrants every year since 2000. The Texas anchored West South Central division and the East South Central division have both added net domestic migrants in 12 of the 14 years.

Early and Later Millennium

Breaking the period in two, the inflation, of the Housing Bubble (2000-2007) and the aftermath (2008-2015, except for 2010), the movement to the South recently has become somewhat stronger, while the movement to the West a bit weaker (Figure 6). The two regions captured 97 percent of net interstate migrants from 2008 to 2015. The Midwest appears to have done better in the later period, with 1.8 percent of the interstate migrants, up from 0.2 percent between 2000 and 2007. However, North Dakota alone accounts for two-thirds of the net interstate migration to the Midwest. Without North Dakota, interstate migration to the Midwest would have made up only 0.6 percent of the total.

State Highlights: 2014

The bulk of the 763,000 net interstate migrants --- 91 percent (694,000) --- moved to the top ten states. Florida regained its lead for the first time since 2005, followed by Texas. All of the other top ten states attracted less than one-third the net domestic migrants that arrived in either Florida or Texas (Figure 7). A large majority of 763,000 net interstate migrants left the bottom ten states --- 78 percent (594,000). New York, Illinois, New Jersey and Illinois lost the most domestic migrants. Each of these states has routinely appeared at or near the bottom during since the beginning of the millennium (Figure 8).

Longer Term State Trends

Overall, eight states gained net domestic migrants in all 14 of the years since 2000 (Table). Of these, Arizona had the largest percentage gain, at 16.5%. However the greatest percentage gain was in Nevada, at 21.5%. However, Nevada had net domestic migration gains only in 12 years, having experienced declines in the years immediately following the housing bust.  

Florida had the largest net domestic migration numeric gain at 1,793,000, but like Nevada suffered two years of net domestic migration losses following the housing bust. Overall, 20 states have experienced net domestic migration gains over the period since 2000.

Two states, Minnesota and Massachusetts, have had 13 years of net domestic migration losses out of the last 14 years. Another nine states have had 14 years of net domestic migration losses out of 14. New York has suffered the largest loss, at 2,278,000 and the largest loss in percentage terms, 12.0%. California, also losing each of 14 years lost 1,739,000 net domestic migrants while Illinois lost 1,027,000 net domestic migrants in 14 years of losses. Others among the largest Northeastern states and Midwestern had 14 years of losses, including Ohio, Michigan and New Jersey. The exception was Pennsylvania, which had four years of net domestic migration gains.







NET DOMESTIC MIGRATION: 2000-2015 State/District Years with Net Domestic Migration Gains: (Out of 14) Rank Net Domestic Migration: % of 2000 Population Rank Net Domestic Migration: Number Rank Arizona 14 1 16.5% 2       853,000 3 South Carolina 14 1 11.5% 3       461,000 6 North Carolina 14 1 10.4% 5       837,000 4 Delaware 14 1 8.0% 8         63,000 19 Oregon 14 1 7.8% 9       269,000 11 Texas 14 1 7.4% 11    1,545,000 2 Tennessee 14 1 6.3% 13       361,000 9 Washington 14 1 6.1% 14       360,000 10 Idaho 13 9 10.0% 6       130,000 13 Georgia 13 9 7.6% 10       629,000 5 Montana 13 9 6.9% 12         62,000 20 Nevada 12 12 21.5% 1       433,000 7 Florida 12 12 11.2% 4    1,793,000 1 Colorado 12 12 9.0% 7       388,000 8 South Dakota 11 15 2.2% 21         17,000 25 Virginia 11 15 2.0% 23       142,000 12 Wyoming 10 17 5.3% 16         26,000 23 Oklahoma 10 17 2.4% 19         84,000 15 Alabama 10 17 2.0% 24         89,000 14 West Virginia 10 17 0.5% 26           8,000 26 Arkansas 9 21 2.7% 18         72,000 16 Maine 9 21 2.1% 22         26,000 23 Kentucky 9 21 1.6% 25         65,000 18 New Mexico 8 24 -1.0% 28        (19,000) 30 North Dakota 7 25 5.3% 15         34,000 21 Utah 7 25 3.0% 17         67,000 17 New Hampshire 7 25 2.3% 20         28,000 22 Missouri 7 25 -0.2% 27        (10,000) 28 District of Columbia 6 29 -2.7% 36        (16,000) 29 Wisconsin 4 30 -1.1% 30        (60,000) 35 Vermont 4 30 -1.3% 31          (8,000) 27 Pennsylvania 4 30 -1.3% 32      (164,000) 42 Iowa 4 30 -1.9% 34        (57,000) 34 Maryland 4 30 -2.9% 38      (153,000) 41 Alaska 4 30 -4.9% 42        (31,000) 31 Louisiana 4 30 -7.3% 48      (326,000) 45 Indiana 3 37 -1.1% 29        (66,000) 36 Mississippi 3 37 -2.6% 35        (74,000) 38 Rhode Island 3 37 -6.6% 46        (70,000) 37 Hawaii 2 40 -3.9% 39        (47,000) 32 Minnesota 1 41 -1.6% 33        (79,000) 39 Massachusetts 1 41 -5.1% 43      (325,000) 44 Nebraska 0 43 -2.8% 37        (47,000) 32 Ohio 0 43 -4.5% 40      (507,000) 46 Kansas 0 43 -4.5% 41      (121,000) 40 California 0 43 -5.1% 44   (1,739,000) 50 Connecticut 0 43 -5.8% 45      (199,000) 43 Michigan 0 43 -7.1% 47      (711,000) 47 Illinois 0 43 -8.3% 49   (1,027,000) 49 New Jersey 0 43 -8.4% 50      (712,000) 48 New York 0 43 -12.0% 51   (2,278,000) 51 Derived from annual Census Bureau population estimates (No data for 2010)

 

Restoration and then Some

Clearly the migration trends predominant in the years prior to the housing bubble and bust have reasserted themselves. It took more than a decade, and a World War to drag the United States out of the Great Depression and eventually to far greater prosperity. It has taken almost that long to accomplish the same thing following the Great Recession, though thankfully without a world war.  If a mild recovery has sparked a reversion to the historic norm, it would be fascinating to see what would happen under boom conditions.

Wendell Cox is Chair, Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), is a Senior Fellow of the Center for Opportunity Urbanism (US), a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California) and principal of Demographia, an international public policy and demographics firm. 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: Florida Oranges by University of Florida IFAS

Trump, Sanders, and the Precariat

Mon, 01/11/2016 - 21:30

While the white working class is shrinking in the US, it remains the largest voting block in the country. That may be why leaders of both parties are concerned that white working-class voters, especially in the Midwest and South, are supporting populist candidates like Donald Trump and Bernie Sanders. They don’t understand that many of these voters blame Wall Street, corporate leaders, and politicians – the East Coast establishment –for destroying their jobs and communities over the past few decades.

Recent polls suggest that almost 60% of Americans, both Democrats and Republicans, “don’t identify with what America has become.” According to Cliff Young and Chris Jackson, these “nativist” Americans are older, whiter, and less educated than the rest of the population – more working-class, in other words. For some middle-class professionals, this “nativism,” exemplified in support for Donald Trump’s racial comments, simply reinforces the assumption that the white working class is inherently racist and foolish. They conveniently ignore the way racism is resurfacing among the middle class as they, too, feel resentment over their economic displacement. As Barbara Ehrenreich warns, “Whole professions have fallen on hard times, from college teaching to journalism and the law. One of the worst mistakes this relative elite could make is to try to pump up its own pride by hating on those — of any color or ethnicity — who are falling even faster.”

The focus on racism and xenophobia ignores an essential reality: precarity is bringing working-class and middle-class voters together politically. As Guy Standing has argued, the emerging precariat is a political class in the making. We see this in the “Fight for $15.” The struggle to increase the minimum wage seeks economic improvement for both the non-college and college educated.

This growing political block not only shares economic resentment but also the underlying racism that has been baked into American culture. No doubt, many college-educated whites looking for work have blamed multiculturalism and affirmative action for their current economic position, and they are just as likely as working-class people to respond to Trump’s racist rhetoric.

As Dan Bolz has suggested, “Trump’s appeal . . . underscores the resistance to the changes the country’s transition have brought forward.” Paul Krugman has suggested that “moderate Republicans and Third Way Democrats” who had tried to explain inequality in terms of skill-biased technological change are now lamenting the rise of Democratic populism. At the same time, progressive Democrats have complained that Sanders has ignored racial inequality while pandering to those facing economic inequality.

Leading Republican pundits like David Brooks and George Will have tried to dismiss Trump, a sure sign of conservative establishment fear. This has led to a squabble with Will calling Trump a “bloviating ignoramus” and Trump responding that Will is the “dumbest and most overrated political columnist of all time.” Some would say that Trump’s attack on political correctness and emphasis on “hot button” issues offer just type of mud fight the white working-class base wants. But more thoughtful moderate Republican pundits understand that such battles will not secure that base. For example, writers like Ross Douthat and Michael Gerson have been ignored and marginalized by the Republican establishment. A decade ago, Douthat and Rahein Salem tried to solidify working-class support by developing sound policy proposals that would appeal to what they called “Sam’s Club” Republicans. The Republican establishment trashed their ideas, and these writers have been reduced to rehashing the social values debate of an earlier era. E.J. Dionne has said Republicans are having trouble taking on Trump not only because “they have delivered next to nothing to their loyal white, working-class supporters.”

The Democratic Party establishment has its own set of fears — about Bernie Sanders. With significant contributions from Elizabeth Warren, Sanders has tried to move the party to embrace policies that are consistent with its New Deal roots. In a speech at Georgetown University, Sanders stressed the disappearance of the middle class, noting that productivity gains and income have been going to 1% of Americans. According to Sanders, a handful of oligarchs now control economic and political life in the U.S. He reminded the audience of the fight over New Deal reforms and types of security it brought to working Americans. Sanders’s takeaway was that “True freedom does not occur without economic security.”

Hillary Clinton has much less appeal for many working-class and minority Democratic voters. While she has sidestepped her past support for her husband’s policies on crime, drugs, welfare, and trade, these voters have not forgotten his legacy. In commenting on these issues, Clinton tends to pander to voters, as when she says that she opposes the Trans Pacific Partnership (TPP “at this time.” No wonder polls consistently show that the American public doesn’t trust her (though polls suggest they do trust Hillary more than the current crop of Republican candidates on some issues).

The Democratic establishment doesn’t worry about Clinton’s occasional forays in populism, which they see as political maneuvering. As Politico has reported, “None of them think she really means her populism.” But Sanders’s populist talk makes them cringe, because he connects with working-class resentment. His speeches appeal to the deep sense of injustice, unfairness, and inequality that many in the new precariat, especially millennials and African Americans, feel toward the East Coast establishment that took away their jobs, houses, and community and now even threatens their Social Security.

Clinton’s wealthy donor base recognizes Sanders’s appeal as a threat to their interests. Democratic Party leaders and their Wall Street backers hope that the Sanders fever will pass quickly and their adherents will then fall in line and embrace Clinton as the only viable option.

If Clinton and her advisors can’t connect with the new populism, voters may well heed the implication from Republicans that nothing will change no matter who is elected. They’re wrong, of course. With a fragile and deeply unequal economy and an aging Supreme Court, the stakes are too high.   But if Democrats are to win this year, they must understand that the populism that drives support for Trump is also central to Sanders’s appeal. Winning the 2016 election will require the kind of grassroots support that helped elect President Obama twice, but to build that support Democrats will have to address the disaffection and resentment of the new precariat.

This piece first appeared at Working Class Perspectives.

John Russo is a visiting fellow at Kalmanovitz Initiative for Labor and Working Poor at Georgetown University and at the Metropolitan Institute at Virginia Tech. He is the co-author with Sherry Linkon of Steeltown U.S.A.: Work and Memory in Youngstown (8th printing).

Photo by Gage Skidmore [CC BY-SA 3.0], via Wikimedia Commons

What's the Best Way Up for Minorities?

Sun, 01/10/2016 - 22:24

In presidential election years, it is natural to see our political leaders also as the brokers of our economic salvation. Some, such as columnist Harold Meyerson, long have embraced politics as a primary lever of upward mobility for minorities. He has positively contrasted the rise of Latino politicians in California, and particularly Los Angeles, with the relative dearth of top Latino office-holders in heavily Hispanic Texas. In Los Angeles, he notes, political activism represents the “biggest game in town” while, in Houston, he laments, politics takes second place to business interests and economic growth.

In examining the economic and social mobility of ethnic groups across the country, however, the politics-first strategy has shown limited effectiveness. Latinos, for example, have dramatically increased their elected representatives nationally since the 1990s, particularly in California. But both Latinos and African Americans continue to move to, and appear to do better in, the more free-market, politically conservative states, largely in the South.

Two Paths to Success

Throughout American history, immigrants and minorities have had two primary pathways to success. One, by using the political system, seeks to redirect resources to a particular group and also to protect it from majoritarian discrimination, something particularly necessary in the case of the formerly enslaved African Americans.

The other approach, generally less well-covered, has defined social uplift through such things as education, hard work and familial values. This path was embraced by early African American leaders such as Booker T. Washington and Marcus Garvey. Today, the most successful ethnic groups – Koreans, Middle Easterners, Jews, Greeks and Russians – demonstrate the validity of this method through high levels of both entrepreneurial and educational achievement.

Read the entire piece at The Orange County Register.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Photo "asian american" by flicker user centinel.

What If Singapore and Las Vegas Had a Love Child?

Fri, 01/08/2016 - 21:38

Compared to what? That’s the question I kept asking myself as I explored Dubai for the second time. Like many people I have serious concerns about the glistening new city-state. But in the end I’ve decided that it’s all really a matter of degree, not kind. I came to this conclusion unexpectedly and begrudgingly. I wanted to hate the place much more than I ultimately did. For all its behind-the-scenes repression and social injustice Dubai is thriving primarily because so many other places are failing so spectacularly. It’s a carnival mirror held up to the rest of the world reflecting the things we don’t like to acknowledge in our own backyards.

How is an indoor ski resort in the Persian Gulf all that different from ice hockey stadiums in Houston, Miami, or Los Angeles? How is the Edmonton Mall in the frozen plains of Alberta really different from the Dubai Mall out in the desert? How is a city of over two million people kept alive in a forbidding landscape with no water or farm land? Ever been to Henderson, Nevada or Scottsdale, Arizona? Isn’t it cruel and immoral to use underpaid and exploited immigrant workers who are systematically threatened with deportation? Really? Really? Do I need to go there?

Dubai is the love child of Singapore and Las Vegas. I choose these two “parents” very carefully. The founder of modern Singapore, Lee Kuan Yew, was fond of saying that what impoverished countries lacked most is good governance. Singapore was transformed from a tiny hardscrabble island nation with no hinterland or natural resources to a world class economy in a matter of forty or fifty years. Skilled management was responsible for most of that success. Singapore’s puritanical one party rule can be criticized on many levels, but providing a safe prosperous life for its people is not on that list. And its inhabitants are free to leave if they feel oppressed – which some do.

Las Vegas cultivated an economy based on strategically pulling in money from outside the region. Tourism, tax havens, property investment, and retirement villas turned a one horse town in a desert wasteland into a massive growth machine. Is Vegas built to last? Probably not. But it has demonstrated some basic principles that, for the time being, are highly effective.

Dubai has far less oil than its neighbors. The emires (Arabic kings) understood that once their modest supplies were pumped dry there would be nothing to fall back on. Their nation would sink into poverty and chaos. You don’t have to look very far in the region to see what happened to other nations whose leaders weren’t so thoughtful or wise. Nearby Yemen is the poster child for depletion, population overshoot, and collapse into bloodshed. 

Dubai provides stability and order in a world where that’s often hard to find,so long as you can afford it. Pakistan, Sudan, and many other places are simply incapable of getting their sh*# together. In a troubled world middle and upper class people are looking for a safe haven to stash their money and their families. Dubai skims the cream off the turbulent bits of the planet. It’s a pure pay-per-view environment and the ultimate gated community. I honestly can’t blame people for choosing to relocate to Dubai when the alternative back home in Syria or Zimbabwe is what it is. This is especially true when so many other destinations aren’t so welcoming.

At the same time armies of desperate workers from failed states are invited in to do the dirty heavy lifting on the cheap. Bangladesh, Pakistan, Ukraine, Burma, Nigeria, Bosnia… Depending on their skill set there’s a special niche for each type. Illiterate Malaysian men have one kind of use in construction. Pretty young women from the Philippines and Bulgaria are put to use as cleaners and nannies (among other things.) These workers are “guests” who are cycled through every couple of years thereby eliminating the need for pensions, schools, proper housing, health care, and other long term social obligations. This is the purest expression of neoconservative Reagan/Thatcherism. For better. And worse. But these workers wouldn’t be in Dubai at all if their home countries provided them with proper education and employment. 

I can’t say I love Dubai or that I would ever want live there myself. But I understand it more now that I’ve poked around in person a couple times. I simply can’t criticize it in isolation without acknowledging how much Dubai is merely taking global trends to their logical extensions. From that perspective it’s a great mirror to examine conditions everywhere rather than indulge in obsessing about Dubai’s particular shortcomings. If you don’t like the place and what it stands for you might want to re-examine your own country first. They may be more similar than you think.

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.

Land Regulation Making Us Poorer: Emerging Left-Right Consensus

Thu, 01/07/2016 - 21:38

There is an emerging consensus about the destructiveness of excessive land use regulation, both with respect to its impact on housing affordability but also its overall impacts on economies. This is most evident in a recent New Zealand commentary.

New Zealand

Both the center-Left and center-Right have come together in agreement on the depth of New Zealand's housing affordability and its principal cause, overly restrictive urban planning regulations. Labour Party housing spokesperson (shadow minister) Phil Twyford and Oliver Hartwich, executive director of the New Zealand Initiative, wrote in a co-authored New Zealand Herald commentary:“Our own research leaves no doubt that planning rules are a root cause of the housing crisis, particularly in Auckland…” (See: “Planning Rules the Cause of Housing Crisis.”).

The Labour Party is the largest opposition party in Parliament, and has traded governing with the currently ruling National Party more than eight decades. The New Zealand Initiative is "an association of business leaders that is also a research institute."

Planning and the New Zealand Housing Crisis

New Zealand’s housing crisis has been building for more than two decades. New house construction has fallen dramatically. According to Twyford and Hartwich, house construction has declined nearly 40 percent from 1973. At the same time the demand for housing has increased. The authors note that New Zealand’s population has increased 50 percent since that time. The housing shortage is further exacerbated by the falling average size of households, which means more new dwellings are required than  indicated by the increase in population

Across the Pacific nation, far more restrictive land use regulations have been adopted, including urban containment boundaries (urban growth boundaries), which have been associated with higher house prices relative to incomes. Before the imposition of strict land use regulation, houses typically cost three times or less that of household incomes. Since then, house prices have double or tripled relative to household incomes. Twyford and Hartich note that houses now cost a “severely unaffordable” 9 times household incomes in Auckland: They say that “A big part of the problem in Auckland is escalating land costs. Linked to this, too few houses are being built. The houses that are being built are too expensive.”

Twyford and Hartwich indicated an even broader general agreement, endorsing comments by the ruling National Party government’s as indicated by Deputy Prime Minister Bill English: “It costs too much and takes too long to build a house in New Zealand. Land has been made artificially scarce by regulation that locks up land for development. This regulation has made land supply on responsive to demand” (also see: "Planning has Become the Externality")

Broad Consequences

Twyford and Hartwich starkly described the consequences of New Zealand's urban planning regime.

“Rising house prices are making us poorer as a nation. They force people to spend an ever larger proportion of their incomes on housing, and it ties up vast amounts of the nation's wealth in housing instead of investing it in businesses that create jobs and exports.”

Twyford and Hartwich also agreed that there is more than enough blame to go around for the mess that has arisen in New Zealand (a criticism that would be appropriate across Australia, the United Kingdom, some markets in the Unites States and the largest markets in Canada):

"Because this is a national housing crisis that has grown over decades and under governments of different hues, playing political blame games is pointless. You cannot solve problems in retrospect. We need to face the facts and work together for real reform."

The authors identified three issues for reform: “First, urban growth boundaries driving up section costs. Second, anti-density restrictions stopping affordable housing. Third, the expensive and inefficient way we fund infrastructure.” They also indicated a familiarity with the economics of development fees (also called impact fees”), often missed by planners in Australia, Canada, the United States and elsewhere. “Even though developers nominally pay for all these costs,” “they note, these costs “are immediately passed on to the new home-buyer.”

Twyford and Hartwich propose what they refer to as "modest" reforms:

“• Instead of using urban growth boundaries, empower communities to protect places that are of special character and value to them.

• Free up density and height controls and rely more on high urban design standards including requirements for open and green space, to allow more affordable housing in the city. Let the market discover where and how people want to live.

• Take developers out of the business of financing new infrastructure. Instead, spread the cost over the assets' lifetime, either by issuing local government bonds or establishing Community Development Districts” (These could be similar to the Municipal Utility Districts of Texas).

Importantly, in their second proposal, Twyford and Hartwich exhibit the appropriateness of consumer choice in housing. As in other goods and services, consumers should be free to make their own housing choices, rather than being limited to those permitted by urban planning  decrees. Yet, urban planning, in recent years, has attempted to reduce house sizes and force higher densities, attempting to drive many households into smaller houses and into condominiums who prefer larger detached houses. 

The concluded that:

"It is an issue of national importance and concerns all of us - all councils and political parties, developers and the wider business community - and of course the people of this country who would benefit the most from restored housing affordability.

The time for reform is now."

The Twyford-Hartwich commentary follows other significant developments in New Zealand.

Indicating the depth of concern about the impact of planning policies on housing prices, the city of Auckland's Chief Economist has proposed setting a target to nearly halve house prices relative to incomes over the next 15 years (to a price-to-income ratio of 5.0, compared to its now reported near 10). This represents an important turnaround in thinking in the city.

Moreover, economic research produced recently for the  Productivity Commission of New Zealand indicated that the housing market distortion has become so bad that “After controlling for a range of other influences, the gradient in land prices (per hectare) from Auckland’s CBD to the rural land adjacent to the city undergoes a step change at the point of the MUL [metropolitan urban limit or urban containment boundary].” The differential was identified at approximately 10 times and the Commission noted that the land value gap has “increasingly binding as housing demand pressures have intensified” (Note 1).

The Emerging International Consensus

Consistent with the Productivity Commission recommendation, London School of Economics professors Paul Cheshire, Max Nathan and Henry Overman, in their recent book, Urban Economics and Urban Policy: Challenging Conventional Policy Wisdom, that (see: “People Rather than Places, Ends Rather than Means”):

“…observed price discontinuities – the difference in market prices across boundaries categories – should become a ‘material consideration’ leading to a presumption in favour of any proposed development unless (a very important ‘unless’) it could be shown that the observed monetary value of the discontinuity reflected wider environmental, amenity or social values of the land in its current use.”

Shortly after the Twyford-Hartwich article, George Mason University professor Ilya Somin wrote of an “emerging cross-ideological consensus” in his Washington Post column. Somin mentions economists perceived as representative of right of center and left of center positions, such as Harvard’s Edward Glaeser and Nobel Laureate and New York Times columnist Paul Krugman, as well as Jason Furman, Chair of the White House Council of Economic Advisors. He quotes Krugman: “this is an issue on which you don’t have to be a conservative to believe that we have too much regulation.”

If there is any issue that the Left and Right should be able to unite around, it is policies that keep cities affordable (a prerequisite to livability) not only for both the threatened middle-class and for lower income citizens. More than 40 years ago, legendary urbanist Sir Peter Hall's raised these as principal points in his critique of urban containment policy. Twyford, Krugman, Cheshire and Harwich are right. This is not an ideological issue but one about the human future in our cities.

Wendell Cox is Chair, Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), is a Senior Fellow of the Center for Opportunity Urbanism (US), a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California) and principal of Demographia, an international public policy and demographics firm. 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.

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Photograph: Phil Twyford, Labour Party housing spokesperson (shadow minister)

Where American Families Are Moving

Wed, 01/06/2016 - 22:21

Much is made, and rightfully so, about the future trends of America’s demographics, notably the rise of racial minorities and singles as a growing part of our population. Yet far less attention is paid to a factor that will also shape future decades: where families are most likely to settle.

However hip and cool San Francisco, Manhattan, Boston or coastal California may seem, they are not where families are moving.

In a new study by the Chapman Center for Demographics and Policy, we found that the best cities for middle-class families tend to be located outside the largest metropolitan areas. This was based on such factors as housing affordability, migration, income growth, commute times, and middle-income jobs. Many of our best-rated cities tend to mid-sized. The three most highly rated were Des Moines, Iowa, Madison, Wis., and Albany, N.Y., all with populations of less than 1 million. Among our top 10 metropolitan areas for families, five are larger than this, but only two—the Washington, D.C. area and Minneapolis-St. Paul—are among the nation's 20 largest metropolitan areas.

Download the full report (pdf) here.

Our bottom 10 includes the media’s favorite two cities, New York and Los Angeles, also the largest metropolitan areas in the nation. Three other large metropolitan areas rank in the bottom 10: Miami, Riverside-San Bernardino, Calif., and Las Vegas. The hipster cities, in other words, are not so amenable to the new generation of young families.   

Why Families Head to the Suburbs

In the 1960s, renowned urbanist Jane Jacobs asserted that “suburbs must be a difficult place to raise children.” But they remain popular nonetheless. According to U.S. Census Bureau statistics, in 2011, children between ages 5 and 14 constituted about 7 percent in urban core Central Business Districts (CBDs) across the country, less than half the level in newer suburbs and exurbs. In Manhattan, singles comprise half of all households, based on the American Community Survey. The highest percentage of women over 40 without children, notes geographer Ali Modarres, can be found in expensive and dense Washington, D.C.

One clear example of the new child-free city is San Francisco, which is now home to 80,000 more dogs than children. In 1970, children made up 22 percent of the population of San Francisco. Four decades later, they comprised just 13.4 percent of the town’s 800,000 residents. Nearly half of parents of young children there, according to 2011 survey conducted by the city, planned to leave in the next three years, largely due to high housing costs. This pattern is accelerating: Since 2011, less-dense ZIP codes have been growing far faster than the more dense ones.

The desire for affordable, single-family homes is driving this trend. Over 80 percent of married couples live in such housing, compared to barely 50 percent of households of unrelated individuals and single. The choice to move to the suburbs also reflects the preference for a safer setting. FBI crime statistics show the violent crime rate in the core cities of major metropolitan areas is nearly 3½ times higher than in the suburbs. Given the murder rate in many major cities, this gap can be expected to grow.

Another key motivation in choosing the suburbs, especially for families with children, is frustration with the quality of urban public education. Suburban schools still consistently out-perform those of inner cities in terms of achievement, graduation and college admission.

In the coming years the progressive penchant for enforced densification—contrary to the preferences of most Americans—could cause some serious intra-party rifts, even in areas that today are reliably Democratic “blue.” The biggest opposition to building more single family housing has often been in liberal bastions such as Marin County, Calif., Boulder, Colo., and Westchester County, N.Y., the official residence of Hillary and Bill Clinton after they left the White House. As one Bay Area blogger observed, “suburb-hating is anti-child”—because it seeks to undermine neighborhoods with children.

Exclusionary and Opportunity Regions

America has always had its fancy neighborhoods, often associated also with racial or ethnic exclusion. But increasingly large parts of the country, and this is true in certain cities and suburbs, are evolving into what Dartmouth College’s William Fischel has called “exclusionary regions”—too expensive for middle-class families to access.

Fischel traces much of this development to regulatory policies that restrict housing supply. In 1970, for example, housing affordability in coastal California metropolitan areas was similar to the rest of the country, as measured by the median multiple (the median house price divided by the median household income). Today, due in part to a generation of strict growth controls, home prices in places like San Francisco and Los Angeles are now three or more times higher than in some other metropolitan areas.

The impact is being felt disproportionately by younger adults, who, unlike earlier generations, do not benefit from housing inflation, and who face other barriers to home-buying ranging from student debt to weak income growth. Coupled with an overall weak economy, the net worth of people under age 35 has plummeted almost 70 percent from 2004 levels, making affordable housing an even more pressing issue.

This cash-short generation is moving to more affordable places. Since 2010, the fastest growth in the ranks of college-educated millennials has been to lower-cost regions such as the four large Texas cities (Dallas-Fort Worth, Houston, San Antonio and Austin), Nashville, Tenn., and Orlando, Fla., as well as such Rust Belt cities as Pittsburgh and Cleveland. These cities offer what the “exclusionary” regions once did: an affordable inner-city option for the young and childless as well as suburbs they can move to as they start families. Other families are settling in small, relatively inexpensive metropolitan areas: Fayetteville, Ark., Cape Coral and Melbourne, Fla., Columbia, S.C., Colorado Springs, Colo., and Boise, Idaho.

High rents, which now constitute the largest share of income in modern U.S. history, could be determining these change in youthful migration. Since 1990, renters' income has been stagnant, but inflation-adjusted rents have soared 14.7 percent. Housing, long the largest expenditure item, now takes an even larger share of family costs, while expenditures on food, apparel and transportation have dropped or stayed about the same. In 2015, increases in housing costs essentially swallowed gains made elsewhere, notably savings on the cost of energy.

This situation is most severe in the highest-priced markets. In New York, Los Angeles, Miami and San Francisco, for example, renters spend 40 percent of their income on rent, well above the national average of under 30 percent. In each of these markets there have been strong increases (income adjusted) relative to historic averages. In New York, rents increased between 2010 and 2015 by 50 percent, while incomes for renters between ages 25 and 44 grew by just 8 percent.

Where the Future Is Being Built

This wide disparity between “opportunity” and “exclusionary” areas is being locked in place by the persistent lack of new housing in most high-priced regions. Since 2010, among the 10 areas that experienced the biggest increases in housing supply, only one was in a deep-blue urban area: Seattle. The cities producing the most new units—Austin, Raleigh, N.C., Houston, Dallas-Fort Worth, Nashville, Charlotte, N.C., Orlando, Oklahoma City, and Jacksonville, Fla.—have managed to keep their housing costs, and rents, to levels acceptable to middle- and working-class families.

In contrast New York, San Francisco, Los Angeles and Boston are authorizing far fewer new units per capita than these rising cities. Houston and Dallas-Ft. Worth, with a population roughly one-third of Los Angeles-Orange Country, have produced close to two times as many new units. Overall, California’s rate of new housing permits is one-third that of the Lone Star State.

This divide will become more pronounced as progressives work to undermine lower-density lifestyles, often in the name of combatting climate change. In California, new single-family homes are gradually being made the exclusive province of the super-affluent, while multi-family units often face opposition from neighbors and even environmentalists. Older residents, with lower property taxes and ideal weather, may stick around, but young people likely will be forced to migrate, particularly as they enter their 30s or get tired of living in their parents’ spare rooms.

No surprise, then, that expensive and highly regulated markets have seen declines in their numbers of children since 2000. In contrast, affordable cities continue to gain families with children in the 5 to 14 age range. Dallas-Ft. Worth, for example, gained 230,000 youngsters between 2000-2013. In Houston, the number was 190,000 and in Atlanta it was more 167,000 over that span. During the same period, Los Angeles’ child population dropped by 303,000, or 15 percent. In New York it fell by 238,000 kids.

Increasingly, employers are factoring affordable local housing stock as an equation into their decisions about where they locate—or relocate. A recent SMU study found that high housing prices to be the biggest reason why Toyota left Los Angeles for the Dallas-Fort Worth area.

The Emerging Family/Childless Divide 

Although American localities are being pitted against one another not just by politics but by their ability to attract young families, the emerging map of where families live is not necessarily custom-made for conservatives.

Key Democratic groups, including African-Americans, are also moving to the suburbs, particularly in less expensive cities, largely in the southeast and Texas. The suburbs are also increasingly the chosen destination of immigrants and their offspring, another blue-leaning cohort. Roughly 60 percent of Hispanics and Asians already live in suburbs. Between 2000 and 2012, the Asian population in suburban areas of the nation’s 52 biggest metro areas grew 66.2 percent, while in the core cities it expanded by 34.9 percent. Of the top 20 cities with an Asian population of more than 50,000, all but two are suburbs.

Republicans also will be challenged to appeal to the rising number of suburban millennials, who also lean Democratic. But there’s some good news for Republicans in that the political future is not going to be shaped primarily in the Obama hotbeds along the coasts, but places, such as the South and the suburbs, where conservatives at are more competitive.

To compete for diversifying suburban, Sunbelt and smaller city electorates, conservatives need to better show why families of all ethnicities should support them. They must make the case that Republican policies are better for voters economically and can provide the most efficient and effective services, particularly for their children.

As for Democratic Party leaders, they would do well to push back the narrative of their urban core elites, who tend to characterize suburbs and Sunbelt cities as soulless enemies of culture and killers of the planet. It is time to recognize that most American families, whatever their ethnicity, desire a decent home in a nice neighborhood, whether in a suburb or a city, where children can be raised. In addition, and this is of increasing importance, they want a place where seniors can grow old amid familiar places and faces. These homeowners will likely yield disproportionate influence over elections since they are more likely to vote -- and be active in local affairs -- than the general population.

Ultimately, these families will determine the political future of the country. After all, there is no “replacement” generation for singles and childless couples. In the long run, wooing families will determine who wins the political wars not only this year but in the decades ahead.

Download the full report (pdf) here.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

New Report: Building Cities for People

Tue, 01/05/2016 - 21:38

This is the introduction to a new report: “Building Cities for People” published by the Center for Demographics and Policy. The report was authored by Joel Kotkin with help from Wendell Cox, Mark Schill, and Ali Modarres. Download the full report (pdf) here.

Cities succeed by making life better for the vast majority of their citizens. This requires less of a focus on grand theories, architecture or being fashionable, and more on what occurs on the ground level. “Everyday life,” observed the French historian Fernand Braudel, “consists of the little things one hardly notices in time and space.” Braudel’s work focused on people who lived normal lives; they worried about feeding and housing their families, keeping warm, and making a livelihood.

Adapting Braudel’s approach to the modern day, we concentrate on how families make the pragmatic decisions that determine where they choose to locate. To construct this new, family- centric model, we have employed various tools: historical reasoning, Census Bureau data, market data and economic statistics, as well as surveys of potential and actual home-buyers.

This approach does not underestimate the critical role that the dense, traditional city plays in intellectual, cultural and economic life. Traditional cities will continue to attract many of our brightest and most capable citizens, particularly among the young and childless. But our evidence indicates strongly that, for the most part, families today are heading away from the most elite, more congested cities, and towards less expensive cities and the suburban periphery. (See report appendix “Best Cities for Families”)

New York, San Francisco, and Los Angeles long have been among the cities that defined the American urban experience. But today, families with children seem to be settling instead in small, relatively inexpensive metropolitan areas, such as Fayetteville in Arkansas and Missouri; Cape Coral and Melbourne in Florida; Columbia, South Carolina; Colorado Springs; and Boise. They are also moving to less celebrated middle-sized metropolitan areas, such as Austin, Raleigh, San Antonio and Atlanta.

Traditional cities will continue to attract many of our brightest and most capable citizens, particularly among the young and childless. But our evidence indicates strongly that, for the most part, families today are heading away from the most elite, celebrated cities, and towards less expensive cities and the suburban periphery.

Download the full report (pdf).

Urban Residents Aren’t Abandoning Buses; Buses Are Abandoning Them

Mon, 01/04/2016 - 21:38

“Pity the poor city bus,” writes Jacob Anbinder in an interesting essay at The Century Foundation’s website. Anbinder brings some of his own data to a finding that’s been bouncing around the web for a while: that even as American subways and light rail systems experience a renaissance across the country, bus ridership has been falling nationally since the start of the Great Recession.

But it’s not buses that are being abandoned. It’s bus riders.

The drop in bus ridership over the last several years has been mirrored by a decline in bus service, even as transit agencies have managed to resume increasing frequency and hours on all types of rail lines – heavy, light, and commuter.* (In this post, “service” means vehicle revenue miles – literally, multiplying a city’s bus or rail vehicles by the number of miles they run on their routes.) After a post-recession low in 2011, by 2013 rail service had increased by over 4% nationally in urban areas of at least one million people. Light rail in particular has continued its decade-plus boom, with a service increase of more than 12% in just two years. By contrast, bus service – which already took a heavier hit in the first years of the recession – was cut an additional 5.8%.

 

And it turns out that when you disaggregate the national data by urban area, there’s a very tight relationship between places that cut bus service between 2000 and 2013 and those that saw the largest drops in ridership. If you live in a city where bus service has been increased, it’s likely that your city has actually grown its bus ridership, despite the national trends. In other words, the problem doesn’t seem to be that bus riders are deciding they’d rather just walk, bike, or take their city’s new light rail line. It’s that too many cities are cutting bus service to the point that people are giving up on it.

 

Admittedly, this is a crude way to demonstrate a very complicated relationship. To rigorously test the impact of bus service on ridership, you’d want to take into account all sorts of other things: the presence of other transit services; population density; gas prices; demographics; and so on.

Fortunately, we don’t have to do that, because researchers at San Jose State University’s Mineta Transportation Institute just did it for us. And they found that even if you control for those other factors, service levels are still the number one predictor of bus ridership.

Still, I can imagine two big objections to the idea that cuts to bus operations are behind ridership declines. First, a lot of cities have opened new rail lines since 2000 – many of which, if not most, replaced heavily-trafficked bus routes. In those cases, cities are adding rail service and reducing bus service, but it obviously wouldn’t be right to say that those bus riders are being abandoned.

But while that has surely happened in some places, it just doesn’t match the overall data. Rail service, including new lines, has been booming since long before the recession – but up until about 2009, bus service was growing, too, or at least holding steady. If rail expansions were driving bus cuts, you’d expect to see those cuts all the way back to the beginning of the data. But you don’t. Instead, cuts to bus routes appear right as transit funding was hit hard by the recession.

Second, you might argue that service and ridership are linked, but the other way around: as ridership declines, agencies cut back on hours and frequency to match demand. Teasing out which way the causation runs would be difficult – and the answer would almost certainly include at least some examples in both directions. One quick-and-dirty way to get an idea, though, is to compare ridership changes from one year to service changes in the next year. If agencies cut service because of earlier ridership declines, then you’d expect to see that places with larger drops in ridership in “Year One” tend to be the places with larger cuts to service in “Year Two.”

 

But, again, they don’t. In fact, just 3% of the variation in service cuts is explained by ridership changes from the year before.

So while that’s hardly ironclad – and I look forward to further research that sheds more light on this problem – it does appear that a major part of the divergence in bus and rail ridership is a result of a divergence in bus and rail service: since the recession, transit agencies have cut bus service year after year, while returning service to rail relatively quickly.

Why did they do that? I don’t know. But I can speculate that it has something to do with the fact that bus transit supporters are not always the same kinds of people as rail transit supporters. Even though more people take buses than trains in nearly every metropolitan area in the country, train riders, on average, tend to bewealthier and whiter. Not only that, but many civic and business leaders who don’t use transit at all are heavily invested in rail service as an economic development catalyst for central city neighborhoods. In other words, rail tends to have a more politically powerful constituency behind it than buses.

As a result, when the recession blew a hole in transit budgets around the country, it may have been politically easier for local governments to fill those holes by sustaining cuts to bus lines, rather than rail.

To be clear, the problem here has nothing to do with whether transit agencies are running more services that are rubber-on-asphalt or steel-on-tracks. As Jarrett Walker has eloquently argued, the technology used by a particular line matters far less than the quality of service: how often it runs, how quickly, for how much of the day.

But there are at least two problems here. First, because of the spread-out nature of even relatively dense American cities, it will be a very, very long time before rail transit can connect truly large numbers of people to large numbers of jobs and amenities. When Minneapolis opened the 12-mile Blue Line light rail in 2004, for example, it was a major step forward for Twin Cities transit – but still, only 2% of the region’s population lived close enough to walk to one of the stations. For everyone else, transit still meant taking the bus, even if they were taking the bus to a train station.

And even in places with well-developed rail networks, those systems are usually oriented to serve downtown commuters. Especially in outer neighborhoods, crosstown trips in places like Chicago, Boston, or DC are heavily reliant on buses. Abandoning buses means abandoning those trips, and the people who depend on them.

 


Boston’s T reaches both Dorchester and Jamaica Plain, but a bus is by far the easiest way to get from one to the other on transit. Credit: Google Maps

 

Second, there are serious equity issues with shifting resources from bus to rail – again, not because of anything inherent to those technologies, but simply because of who happens to use them in modern American cities. In most cases, shifting funding from bus to rail means shifting funding from services disproportionately used by lower-income people to ones with with a stronger middle- and upper-middle-class constituency. And while transit ought to be viewed as much more than just a service for the poor, we can’t ignore the equity impacts of transit policy.

In light of all this, we have to stop talking about America’s bus woes as a ridership problem. All the evidence suggests that when service is strong, and buses are a reliable way to get to work, school, or the grocery store, people will take them. Instead, the problem is that fewer and fewer people have access to that kind of strong bus line. If we care about ridership, we need to restore and enhance the kind of transit services that people can rely on.

* “Heavy rail” includes traditional subways and elevated trains found in cities like New York, Washington, and Chicago. “Light rail” includes many newer systems, with smaller train sets that are sometimes designed to run on streets as well as in their own right of way. Rail lines in Seattle, the Twin Cities, and Dallas are typical of light rail. “Commuter rail” services generally reach from central business districts far out into the suburbs, and are meant almost exclusively for peak-hour workers.

This piece was first published by City Observatory on its CityCommentary blog.

Daniel Kay Hertz is completing his graduate studies at the University of Chicago Harris School of Public Policy. He has written about urban demographics, neighborhood change, housing policy, and public transit for the Washington Post, CityLab, Next City, and other publications, as well as on his personal blog.

Image from BigStockPhoto.com: A metro bus in Madison, Wisconsin.

The End of Localism

Sun, 01/03/2016 - 21:38

This could be how our experiment with grassroots democracy finally ends. World leaders—the super-rich, their pet nonprofits, their media boosters, and their allies in the global apparat—gather in Paris to hammer out a deal to transform the planet, and our lives. No one asks much about what the states and the communities, the electorate, or even Congress, thinks of the arrangement. The executive now presumes to rule on these issues.

For many of the world’s leading countries—China, Russia, Saudi Arabia—such top-down edicts are fine and dandy, particularly since their supreme leaders won’t have to adhere to them if inconvenienced. But the desire for centralized control is also spreading among  the shrinking remnant of actual democracies, where political give and take is baked into the system.

The will to power is unmistakable. California Gov. Jerry Brown, now posturing as  the aged philosopher-prince fresh from Paris, hails the “coercive power of the state” to make people live properly by his lights. California’s high electricity prices, regulation-driven spikes in home values, and the highest energy prices in the continental United States, may be a bane for middle- and working-class families, but are sold as a wonderful achievement among our presumptive masters.

The Authoritarian Impulse

Under President Obama, rule by decree has become commonplace, with federal edicts dictating policies on everything from immigration and labor laws to climate change. No modern leader since Nixon has been so bold in trying to consolidate power. But the current president is also building on a trend: Since 1910 the federal government has doubled its share of government spending to 60 percent. Its share of GDP has now grown to the highest level since World War II.

Today climate change has become the killer app for expanding state control, for example, helping Jerry Brown find  his inner Duce. But the authoritarian urge is hardly limited to climate-related issues. It can be seen on college campuses, where uniformity of belief is increasingly mandated. In Europe, the other democratic bastion, the continental bureaucracy now controls ever more of daily life on the continent. You don’t want thousands of Syrian refugees in your town, but the EU knows better. You will take them and like it, or be labeled a racist.

Already the disconnect between the hoi polloi and the new bureaucratic master race has spawned a powerful blowback, as evidenced by the rise of rightist, even quasi-fascist parties throughout the old continent. The people at the top—including much of the business leadership—may like the idea of a central European master-state, but support for the EU is at record low. Increasingly Europeans want, at the very least, to dial down the centralization and bring back some control to the local level, and something of the primacy of traditional cultures and what are still perceived  as “European values.”

In some ways, the extreme discontent in America—epitomized by the xenophobic Trump campaign—reflects a similar opposition to bureaucratic overreach. This conflict can be expected to grow as new federal initiatives—initiatives that seek, among other things, to enforce racial and class “balance” in neighborhoods and high-density housing in low-density suburbs—stomp on even the pretense that cities might have any control over their immediate environment. This policy is being adopted already in some regions, notably Minnesota, where planners now seek to change communities that are too white and affluent populations need to meet new goals of class and economic diversity.

The Rule of the Wise-people

Historically, advocacy for the rule of “betters” has been largely a prerogative of the right. Indeed the very basis of traditional conservativism—epitomized by the Tory ideal—was that society is best run by those with the greatest stake in its success, and by those who have been educated, nurtured, and otherwise prepared to rule over others with a sense of justice and enlightenment. In this century, the idea of handing power to a properly indoctrinated cadre also found radical expression in totalitarian ideologies such as communism, fascism, and national socialism.

In contemporary North American and the EU, the ascendant controlling power comes from a new configuration of the cognitively superior, i.e., the academy, the mainstream media, and the entertainment and technology communities. This new centralist ruling class, unlike the Tories, relies not on tradition, Christianity, or social hierarchy to justify its actions, but worships instead at the altar of expertise and political correctness.

Ironically this is occurring at a time when many progressives celebrates localism in terms of food and culture. Some even embrace localism as an economic development tool, an environmental win, and a form of resistance to ever greater centralized big-business control.

Yet some of the same progressives who promote localism often simultaneously favor centralized control of everything from planning and zoning to education. They may want local music, wine, or song, but all communities then must conform in how they operate, are run, and developed. Advocates of strict land-use policies claim that traditional architecture and increased densities will enable us to once again enjoy the kind of “meaningful community” that supposedly cannot be achieved in conventional suburbs.

In the process, long-standing local control is being squeezed out of existence. Ontario, California, Mayor pro-tem Alan Wapner notes that powers once reserved for localities, such as zoning and planning, are being systematically usurped by regulators from Sacramento and Washington. “They are basically dictating land use,” he says. “We just don’t matter that much.”

The Road to Imperium

As the Obama era grinds to its denouement, grassroots democracy, once favored by liberals, is losing its historic appeal to the left. Important progressive voices like Matt Yglesias now suggest that “democracy is doomed.” Other prominent progressives, such as American Prospect’s Robert Kuttner, see the more authoritarian model of China as successful while the U.S. and European political systems seem tired.

Increasingly the call is not so much for a benevolent and charismatic dictator, but for an impaneled committee of experts to rule over our lives. Former Obama budget adviser Peter Orszag and Thomas Friedman argue openly that power should shift from naturally contentious elected bodies—subject to pressure from the lower orders—to credentialed “experts” operating in Washington, Brussels, or the United Nations.

The new progressive mindset was laid out recently in an article in The Atlantic that openly called for the creation of a “technocracy” to determine energy, economic, and land-use policies. According to this article, mechanisms like the market or even technological change are simply not up to the challenge. Instead the entire world needs to be put on a “war footing” that forces compliance with the technocracy’s edicts. This includes a drive to impose energy austerity on analready fading middle class, limiting mundane pleasures like cheap air travel, cars, freeways, suburbs, and single-family housing.

The vagaries of America’s political system have contributed to the left’s growing embrace of centralism. The Republican ascendency in virtually all states away from the coasts all but guarantees their control of most legislative branches. In contrast, the Democrat control of major cities, particularly along the coasts, and their ability to woo voters who come out only every four years, gives them a tremendous advantage on the presidential level.

This creates the ideal preconditions for  what Ross Douthat accurately notes is a rising “Caesarism of the left” since the 2010 Republican congressional sweep. There is broad backing among liberals for President Obama’s tack of avoiding Congress through presidential decrees. Nor is this tendency likely to end soon. Hillary Clinton, whose husband’s success was in part derived from working with Republicans, is already stating her intention to go over Congress if they don’t go along with her ideas.

My word to liberal friends: Think a bit about this embrace of  imperial presidential power if the person ruling from above was, say, Ted Cruz, Marco Rubio, or, worst of all, Donald Trump.

Slouching towards Imperium

The centralization of power reflects disturbing tendencies in our economic life. Despite all the hopes for a more distributed, less concentrated “new economy,” we appear to be moving ever more toward economic centralization on a massive scale. Indeed, after decades of losing market share to smaller firms, the share of GDP controlled by the Fortune 500 has risen from 58 percent of nominal GDP in 1994 to 73 percent in 2013. 

Part of this is driven by the relentless growth of large financial institutions, the very folks who precipitated the financial crisis with their ill-advised speculations. They have taken advantage of new regulations to greatly increase their share of the financial market to an unprecedented 44 percent.

This economic consolidation, and how it plays into centralization, is rarely recognized by Republicans, living in mortal fear of offending their cherished K Street collaborators. A powerful central state often rains money on well-connected capitalists who have flourished under state-dominated systems in places as varied as Venezuela and Iran. Similarly, a draconian climate regime certainly enhances the fortunes of  capitalists such as Elon Musk as well as other Silicon Valley and Wall Street supporters who seek to force consumers and businesses into purchasing expensive, often unreliable renewable power from favored wind and solar projects.

The increasing power of the central state, in contrast, is the bane of small companies, who are far less well-positioned to deal with ever-increasingly regulation. Washington’s efforts to control financial activities proved a disaster for the country’s entrepreneurial economy, long dependent on small community banks for loans. Overall for the first time in recent memory (PDF), more businesses are being destroyed than created. Concurrently, if unsurprisingly, themiddle class is shrinking, and seeing its share of the economy steadily diminish.

There are some alarming parallels between these developments and the last days of the Roman Republic. There, too, developed a similar tendency toward vicious partisanship and a growing concentration of wealth in a few hands. In Rome’s case, the old middle classes and yeoman farmers were gradually replaced by patricians with access to slave labor; in our society, cheap foreign labor has been perceived as doing much the same for our oligarchs. Much as in Rome, our republican virtues are also fading. Instead, society seems to require a sure hand, particularly if the central authorities decide to transform society in ways that the vast majority might not like (for example, essentially banning suburban development or gas-powered cars). It may take a strict nanny state, to paraphrase Mary Poppins, to make the bitter medicine go down.

The Coming Conflict

Yet there’s a problem with centralization: People don’t trust the very institutions that would be charged with carrying out their policies. Levels of trust for the dominant institutions like the federal government, Congress, the courts, big banks, media, and the academy are at historically low levels.

Roughly half of all Americans, according to Gallup, now consider the federal government “an immediate threat to the rights and freedoms of ordinary citizens.” In 2003 only 30 percent of Americans felt that way. Even in my home state of California—now a mecca for ever-expanding government—large majorities favor transferring tax dollars out of Sacramento to the localities, according to a December Public Policy Institute of California poll.

Critically this blowback is not among conservatives or exurbanites. Much of the strongest opposition to the federal and state planning regimes are in areas such as California’s Marin County, north of San Francisco, where residents have objected to densification schemes that, they maintain, would undermine the “the small-town, semi-rural, and rural character of their neighborhoods”—the very qualities that attracted them there in the first place.

Similar attempts to enforce density on suburban population have also led to uproars in  blue bastions such as the northern Virgina suburbs, the famously progressive University of California at Davis, and hip Boulder, Colorado. The New York Times’s Tom Edsall notes that the federal Department of Housing and Urban Development’s dictates may have already shifted politics in affluent Westchester County, an early target of the social engineers seeking to enforce HUD policies, to the right.

Some leading progressives, like Nation contributor and Bay Area activist Zelda Bronstein, attack the growth of regional governments, designated to force compliance with state and federal mandates, as fundamentally undemocratic, embracing “insular, peremptory style of decision making.” Even millennials, who have tended to the left, are skeptical about over-centralized government. A recentNational Journal poll showed that they, like most Americans, are not enamored of top-down solutions: Less than a third favor federal over locally-based solutions.

Simply put, there is no huge appetite for ever expanding federal power among the majority of the populace. What is missing, outside of nihilistic opposition to all government, is a strong movement advocating for more authority in the hands of local communities, families, and volunteer organization. This does not necessarily mean a decline in environmental standards, since most people care most about the places where they and their families reside. Even with climate change, a carbon tax could be approved without adopting the California formula of ever more mega-regulations covering virtually every aspect of life.

As Alexis de Tocqueville noted in the 1830s, the genius of this republic lies not in its central state, but in its dispersion, voluntary association, and ideological diversity. If we undermine the legacy of our federal structure to something more akin to that, say, of France or Russia, the United States could no longer play its historic role as a rare beacon of independence and self-government in a world increasingly dominated by various manifestations of centralized tyranny.

This piece first appeared at The Daily Beast

.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Barack Obama Photo by Bigstock.

What the Midwest can learn from the Middle East

Sat, 01/02/2016 - 21:38

Why is Saudi Arabia suddenly the pit stop of choice for an impressive laundry list of major companies? How is it positioned among the growing number of Middle-Eastern industrial free zones? And should Rust Belt cities like Cincinnati look this way for answers?

If a nation's cities are the products of their ingredients, the Saudi Arabian pantry leaves much to be desired, with a grueling climate, a monopolistic economy built on the extraction of fossil fuels, looming regional threats, and conservative social practices that hinder freedoms, especially for women.

The resulting menu reflects the bleak inputs. Expansive wealth has combined with poor urban design to generate an unsavory cocktail of high-speed pedestrian-hostile highways and walled single-use compounds. Erratic industrial development and heavy utility infrastructure haphazardly dot the desert landscape. For decades, Saudi Arabia’s physical development has emulated American suburbia, prioritizing privacy over community to the extent it’s been organized at all. The nation’s prosperity, driven by oil, yields few private sector jobs. Reform has been slow and modest, and educational advances, primarily for men, have focused on growing computer and technical skills with little attention to intellectual fields.

But, despite all of its downsides, Saudi Arabia is advancing because it has recognized that oil wealth cannot drive the country forever. Much like America’s Rust Belt, Saudi Arabia is confronting the reality that, in the future, the economy needs to find new drivers.

To do this, Saudi Arabia committed to developing several new cities designed to generate opportunities for the country’s exploding young population to stay at home. The intent was to invest existing surpluses to develop new and different kinds of economies to fuel the country’s future. This contrasts with the region’s reputation for lavish “living in the moment.”

Rather than pressing solely for an emergence of finance or innovation that it is ill-equipped to attract, Saudi Arabia has made a tactical decision to leverage its industrial infrastructure, considering the regional advantage of its unique global positioning along the Red Sea at the confluence of busy shipping routes.

One of these cities, the King Abdullah Economic City, is by some measures the biggest development project in the history of the world. KAEC includes an unusual confluence of many modes of industrial transport, matching a seaport with a rail port and highways connecting the Indian Ocean and Suez Canal into the Middle East and Eastern Europe. Smartly, much of its investment has focused on increasing and humanizing its industrial infrastructure, leveraging the location by luring major industrial and shipping outfits to conduct midstream logistics activities here, midway through their global journey.

By increasing the attractiveness of this junction to global companies, KAEC is hoping to trade one heavy industry — oil — for a diverse array of others. Unlike recent Chinese megaprojects designed to passively accommodate inevitable increases in demand around existing economic drivers, KAEC is endeavoring to actively spur the organic emergence of a new economy by making the world take notice: first, of the things that Saudi Arabia’s population is capable of handling today, and later, of more cosmopolitan industries that can only thrive once slowly-materializing social advances have taken root. It's well-understood that, as part of the logical phasing by which most cities historically have grown, short-term industrial growth is the key to driving future gains in white collar fields over time.

KAEC is also the world’s first publicly-traded city. While growth has been slow, the city has stayed afloat through investment by half of the Saudi population and a rising stock price that over the last three years has outpaced the Dow. Its growth is predicated on continued public buy-in of its strategies; its fortunes are intrinsically tied to national transformations.

KAEC is one of many industrial free zones that are all the rage in this part of the world. The Middle East is now dotted with hundreds of them, and their power and attractiveness is leading the world to slowly reshape logistics activities around them. The massive economic shifts that these strategic investments have attracted seem by and large to be working. Another economic zone known as Al Duqm is rumored to be high on the military’s list of landing spots for relocating US military operations in the Middle East; it is a site that a few years ago could barely sustain a small fishing village.

On the other side of the world, thousands of miles away in the heartland of the United States, dozens of cities once buoyed by manufacturing are similarly trying to reshape their identities, among them Detroit, Buffalo, Pittsburgh, Milwaukee, Cleveland and Cincinnati. For some of them, a Saudi-inspired back-to-the-basics industrial approach could be part of the answer.

Many of these cities have already identified an increased midstream logistics role brought on by the ripple effect of the planned expansion of the Panama Canal. Chicago, the traditional link between the Mississippi River and the St. Lawrence Seaway, is reducing its water-based industrial volumes as it orients its river toward tourism. This further emboldens the ambitions of cities like Cincinnati to take up the slack — it has recently worked to up the profile of its river port from forty-ninth to ninth-largest by merging with adjacent cities.

A realignment in the nation’s energy transport arteries is also opening the door for smaller inland cities to become energy transport hubs. A decrease in energy from the Middle East, an increase from Canada and the northern United States, and increased local cultivation through renewables, natural gas, and small-scale drilling are broadening the energy transport infrastructure beyond well-established coastal ports.

As America’s manufacturing profile has shifted, freight transport has remained steady between water, rail, ground, and air modes. As a result, cities that link them are well-positioned as potential logistics hubs. New trends in shipping demands also suggest positive prospects for ports that can accommodate water-based deliveries further inland. Cincinnati is particularly well-positioned, because its proximity to the wide Ohio River makes it more attractive than similar cities on smaller rivers.

Despite many reasons for cities like Cincinnati to embrace a logistics-based future, obstacles have stood in the way. For one, trends in modern urban design and economic development do not favor industry. Even though manufacturing makes up 35 percent of the American economy, most planning theory has focused on eliminating or reusing industrial sites for dense urbanism, rather than embracing them for industry, taking humane factors into greater account. The latter would be a logical approach, given that many industrial nuisance qualities have been eliminated. Instead, planners have shunned most industrial activity as inherently hostile to cities, even amid a chorus of advocates for an increase in local production.

Many Midwest mayors have paid lip service to manufacturing, recognizing the need to accommodate the logistics needs of major companies. Simultaneously, however, planners have been empowered to transform large swaths of industrial land into developments full of the urban frills popular on the East Coast. Uniquely positioning cities to spur organic growth seems far less popular than trying to out-duel other cities for a share of millennial and corporate migration to duplicate versions of generic amenities. The limited embrace of industry has come through so-called “innovation districts,” geared at capturing a piece of the creative tech economy, rather than more place-specific heavier logistics.

Today, many hot spots are emerging that will be barometers of the struggle between the industrial opportunists and the urban development hegemony. In Cincinnati, these battles are subtly being waged over sites like Queensgate, a rare swath of intact industrial land at the precious confluence of water, rail, and highway. Its proximity to downtown has won it attention – and made it a prized trophy – in the strategy struggle between those who want to capitalize on a strategic industrial position and those who want to grow Cincinnati’s urban core. As Cincinnati works to attract companies away from flashier cities, it can do both, by embracing Queensgate’s unique industrial potential as an asset.

As Cincinnati looks for an answer, it may consider turning to the unlikeliest of case studies. Somewhere between the character of Midwestern cities and those on the East coast, there may be an answer that lies in the Middle East.

Roger Weber is a city planner specializing in global urban and industrial strategy, urban design, zoning, and real estate. He holds a Master’s degree from the Harvard Graduate School of Design. Research interests include fiscal policy, demographics, architecture, housing, and land use.

Flickr photo by Joel Willis: John A. Roebling Bridge, Ohio River, Cincinnati

My Other Bicycle Is An Airbus A380

Thu, 12/31/2015 - 21:38

I could be a pompous prick and brag about how I live in a compact, walkable, mixed use, transit served neighborhood in a seven hundred square foot apartment. My commute to work is measured in blocks not miles. Compared to the average North American I use tiny little sips of water and power. I already own all the physical stuff I’m ever going to need or want. I’m practically invisible in terms of my personal impact on the environment. Yet I enjoying a very high quality of life.

Where’s my halo, damn it!

Except…

I fly a lot. I mean… a lot. Sometimes I feel like I’m in the air more than on the ground. I fly primarily because I can. I have access to various personal and business connections that allow me to travel at heavily subsidized rates which in no way reflect the real cost of the flights – on many levels. I may as well live in a giant house on the edge of the metroplex and drive a massive SUV two hours to work every day as far as my environmental footprint is concerned. I’m really just a cheap carbon whore.

I occasionally attempt to rationalize my activities. For example, I know for a fact that if I exercise restraint and stop flying entirely for the rest of my life someone else somewhere on the planet will burn up that fuel instead. The oil isn’t going to stay in the ground just because I don’t use it. The global demand for fuel is insatiable. It might be burned by an entire village of rural peasants in India over a lifetime of heating and cooking. Or it might be used in an instant to convert sea water into irrigation for a golf course in Dubai. But it’s going to be burned regardless of my individual piety.

 

Like I said. This is a self serving rationalization. But it still reflects reality. And I have 7.3 billion data points to back me up. That’s the current human population all dipping in to the oil well together – and it’s a race to the bottom.

So here’s how I think about my nasty flying habit instead. It’s entirely discretionary. So is driving, which I do very little of. So is eating meat, which I could live without. So are most of the things I do in my life. My base consumption is very very low and it can get even lower without me feeling deprived in any way. I have a degree of personal resilience in my life. There’s slack and wiggle room. If I believed that I was part of a much larger global movement to voluntarily pull back, to make modest adjustments in order to serve a larger cohesive cause for social justice… I absolutely would. But for the moment, I see no point. We either all do this together or we don’t do it at all.

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.

What Does It Mean to Bring Buffalo Back?

Wed, 12/30/2015 - 21:38

Prior to the holidays City Journal published  my major essay on Buffalo in their fall issue.  Here’s an excerpt:

Local planner Chuck Banas observes that while Buffalo’s regional population today is roughly the same as it was in 1950, the urbanized footprint of the region has tripled. “Same number of people, three times as much stuff to pay for” is the quip—and it’s true. Physical capital must either be maintained at great cost in perpetuity or ignored and allowed to become a drag on the city. Between 1980 and 2011, according to the University of Buffalo Regional Institute, Buffalo-area governments issued permits for almost 60,000 new single-family homes—while regional population declined. Given the gargantuan scale of state aid to the region, this is clearly not market-rate development.

While Buffalo’s urban advocates agree that investing in sprawl is misguided, they’re less critical about new construction in the urban center. The city’s $550 million light-rail line was an epic civic folly, yet Buffalo is currently reconstructing a downtown station on the line. More ill-conceived spending lies ahead. The region’s long-range transportation plan projects a need for an additional $100 million in capital expenditures through 2040, just to keep the existing line running—plus more operating subsidies every year. Seen in this light, neither cranes on the skyline nor bulldozers paving the countryside are necessarily good signs for Buffalo.

I learned a lot in Buffalo and it stimulated my thinking about post-industrial cities generally. What is the best way to bring some of these places back? What does it even mean for them to be back?  If you wanted to inject a billion dollars of state or federal money into them, where would it most profitably be spent? These and other questions are ones I’ll be looking at in more detail during 2016.

Read the entire piece at City Journal.

Aaron M. Renn is a senior fellow at the Manhattan Institute and a Contributing Editor at City Journal. He writes at The Urbanophile, where this piece originally appeared.

In One Chart: Achieving the Demographic Dividend

Tue, 12/29/2015 - 21:38

The experience of China provides a useful policy template for countries with booming populations in south and southeast Asia and in sub-Saharan Africa. The Chinese boom showed that a growing working-age population combined with a declining fertility ratio can result in a large demographic dividend if certain conditions are met. As noted in this recent post, two important drivers of lower fertility are an increase in female literacy and a decline in child mortality.

At the same time, better governance, lower corruption, an improvement in business conditions and increased investments in infrastructure and education would lead to higher foreign and domestic investments and greater job creation. Greater urbanization and an expansion of foreign trade can also be byproducts or causes or effects of the demographic dividend.

After the demographic dividend, a country can remain on a growth path through additional political and regulatory reforms that encourage innovation and strengthen institutions.

Sami Karam is the founder and editor of populyst.net and the creator of the populyst index™. populyst is about innovation, demography and society. Before populyst, he was the founder and manager of the Seven Global funds and a fund manager at leading asset managers in Boston and New York. In addition to a finance MBA from the Wharton School, he holds a Master's in Civil Engineering from Cornell and a Bachelor of Architecture from UT Austin.

Declining Population Growth in China’s Largest Municipalities: 2010-2014

Mon, 12/28/2015 - 21:38

After three decades of breakneck urban growth, there are indications of a significant slowdown in the largest cities of China. This is indicated by a review of 2014 population estimates in the annual statistical reports filed individually by municipalities with the National Bureau of Statistics.

For context, municipalities in China, which are also translated as “cities” in English are nothing like cities as is commonly understood in English. In China, municipalities are large geographic areas that have their own governments, but also control rural lands often far beyond the urban area. Indeed, in China, counties are subdivisions of cities, while in Anglo heritage nations, cities are within counties, with the notable exception of the city of New York or in a few, like San Francisco, are identical with counties. Some cities, like Kansas City and Atlanta stretch into adjacent counties, though occupy only part of their main county.

This article examines municipality population growth trends, from 2010 to 2014 and comparing to the 2000 to 2010 period. The analysis focuses on 21 municipalities, which include 20 of the 25 largest built-up urban areas in the nation areas of continuous development. The 21st municipality is Foshan, which shares its built-up urban area with Guangzhou. The statistical reports the other five municipalities did not provide sufficient data to be included in this analysis (Table).

Back in 1980, as Deng Xiaoping’s reforms were beginning to take effect, China was approximately 20 percent urban. By 2010, 55 percent of Chinese citizens lived in urban areas, a near tripling of the urban share. A large share of this growth was the so-called “floating population,” which was made up largely of rural residents who moved to the urban areas to take jobs in the export oriented factories and the massive building and infrastructure construction sites.

The Roaring 2000s

In the 2000s, the largest Chinese municipalities experienced some of the most rapid growth in world history. Shanghai and Beijing added between 6 and 7 million residents. Both had annual growth rates of between 3% and 4%. During the same period, the U.S. annual growth rate was about 1.0 percent.

But even these growth rates were not the highest in the country. Xiamen, in Fujian grow at an annual rate of 5.6%, while Suzhou (in Jiangsu, adjacent to Shanghai on the west) and Shenzhen (in Guangdong, just north of Hong Kong) expanded their population at rates between 4% and 5%.

The Slowing 2010s

The last four years have been very different. Overall, these 21 municipalities added population at a rate of 2.2% annually between 2000 and 2010. Between 2010 and 2014, the annual growth has been reduced by nearly half, to 1.2%. This is a far greater rate than that of the national population increase, which is gradually moving from modest growth to eventual decline. The 2010 to 2014 annual national population growth rate was 0.50 percent, a 12 percent reduction from the 0.57 percent 2000 to 2010 annual rate, according to the National Bureau of Statistics. The cause of the larger decline in these municipalities thus seems likely to be the result of reduced domestic migration from more rural areas.

Nearly all --- 19 of the 21 municipalities --- are experiencing slower growth in this decade than in the last. Only one, Tianjin, is experiencing the growth similar to the fast-growing municipalities of the last decade. Between 2010 and 2014, Tianjin grew 4.1%, annually, a considerable increase over its 2.8% rate from between 2000 and 2010. During this decade, Tianjin added approximately 560,000 residents annually, the largest increase among the 21 municipalities. This fits well with national priorities, since the high densities of Beijing and related consequences have led to a plan to decentralize the population of nearby Beijing (100 miles or 160 kilometers away), encouraging the movement of residents, businesses and government agencies to Tianjin as well as to the municipalities of Tangshan (location of the great 1976 earthquake), and Langfang (midway between Beijing and Tianjin) and Baoding in the province of Hubei. The newly integrated area would be called Jin-Jing-Ji.

Chongqing has begun to grow, after having lost 1.7 million residents in the last decade. . But Chongqing itself is uncharacteristic and the most “uncitied” of Chinese municipalities. Chongqing is a largely rural province, governed directly from Beijing (like Beijing, Shanghai and Tianjin). The principal built-up urban area, Chongqing, has a population of less than 7.5 million, or one-quarter of the municipality population. Chongqing has grown 0.9 percent annually since 2010 and is adding 267,000 residents per year. The population losses of the last decade occurred principally in the rural areas, as the Chongqing metropolitan area added more than three million residents, according to United Nations data.

Strong growth continues in Beijing, but at a much reduced rate. The annual population growth rate in Beijing has dropped 38%, to 2.3% annually. Beijing is adding 475,000 residents annually, second only to nearby Tianjin.

Shanghai’s growth has fallen even further, to 60% below the 2000 (1.3%). Shanghai is adding 310,000 residents annually. Other municipalities in the Yangtze Delta region are not doing as well. Suzhou’s annual growth has dropped more than 90% to 0.3%. Hangzhou and Nanjing have seen their growth drop more than 70 percent, with Hangzhou growing 0.5 percent annually and Nanjing 0.7 percent.

The Pearl River Delta, in Guangdong, was at the heart of China’s three decade economic miracle, with its export driven growth. All four of the Pearl River Delta’s largest municipalities have seen their population growth rates dropped by 70% or more. Shenzhen grew 4.0% in the 2000’s and grows barely 1.0% today. Guangzhou has fallen from 2.5% in the 2000 to 0.7%. Foshan, which grew 3.0% in the 2000’s, now grows only 0.5%. Dongguan has fallen from a growth rate of 2.5% in the 2002 0.4% over the past four years, the slowest among the Pearl River Delta giants.

Some other municipalities have grown nearly as quickly as before. Zhengzhou, the capital of Henan, grew rapidly during the 2000’s, at 2.6%, and has maintained a growth rate of 2.1%. With the third fastest growth rate, after Tianjin and Beijing, Zhengzhou is adding 186,000 residents annually, Quanzhou (Fujian), one of the best world examples of “in situ” urbanization is growing at 85% of its previous rate, though only 0.9% annually. Wuhan (Hubei), a long-time central China manufacturing center has been similarly successful in retaining its growth, and now has an annual growth rate of 1.4%.

Without complete information on all of China’s largest municipalities, it is difficult to assess the extent to which (if any) urban growth has slowed. Certainly, the national government remains committed to strong urban growth. On the other hand, with China’s slowing economic growth rates, there may be less reason to leave the countryside for the city.



2014 Population & Comparison of 2000-10 and 2010-4 Growth Rates Municipalities of China Corresponding to Largest Built-Up Urban Areas Annual Population Growth % Annual Population Growth Municipality Population: 2014 2000-2010 2010-2014 2000-2010 2010-2014 Beijing            21,516,000 3.8% 2.3%      604,300      476,000 Chengdu            14,428,000 2.4% 0.7%      293,900        95,000 Chongqing            29,914,000 -0.6% 0.9%     (166,700)      267,000 Dongguan              8,343,000 2.5% 0.4%      177,400        30,750 Foshan              7,351,000 3.0% 0.5%      185,600        39,250 Guangzhou            13,081,000 2.5% 0.7%      275,900        95,000 Hangzhou              8,892,000 2.4% 0.5%      182,100        48,000 Jinan              7,067,000 1.4% 0.9%        89,200        63,250 Nanjing              8,216,000 2.7% 0.7%      187,900        52,750 Qingdao              9,046,000 1.5% 0.9%      122,100        82,750 Quanzhou              8,440,000 1.1% 0.9%        84,600        77,750 Shanghai            24,257,000 3.4% 1.3%      661,100      309,500 Shenyang              8,287,000 1.2% 0.6%        90,200        45,250 Shenzhen            10,790,000 4.0% 1.0%      334,900      108,000 Suzhou            10,604,000 4.4% 0.3%      366,800        36,000 Taiyuan              4,299,000 2.3% 0.6%        85,800        24,250 Tianjin            15,168,000 2.8% 4.1%      308,900      557,500 Wuhan            10,338,000 1.6% 1.4%      147,200      138,250 Xiamen              3,810,000 5.6% 1.9%      147,800        69,750 Xi'an              8,628,000 1.5% 0.5%      119,300        40,000 Zhenghou              9,371,000 2.6% 2.1%      197,000      186,000 Total          241,846,000 2.2% 1.2%   4,495,300   2,842,000 Calculated from annual municipality reports to the National Bureau of Statistics and NBS data Comparable data not available for 5 municipalities corresponding to the 25 largest built-up urban areas Built-up urban areas from Demographia World Urban Areas

 

Photograph: Still fast growing Zhengzhou (by author)

Wendell Cox is Chair, Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), is a Senior Fellow of the Center for Opportunity Urbanism (US), a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California) and principal of Demographia, an international public policy and demographics firm. 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.

Seeing the West as Worse

Sun, 12/27/2015 - 21:38

“Hey-hey, ho-ho, Western culture’s got to go.

– Slogan from 1988 Stanford University protest led by Jesse Jackson.

In the aftermath of San Bernardino and Paris massacres, our cognitive leaders – from President Obama on down – have warned Americans not to engage in what Hillary Clinton has described as “a clash of civilizations.” But you can’t have a real clash when one side – ours – seems compelled to demean its traditions and values.

Leaders in America and Europe don’t want to confront Islamic fundamentalism, or other nasty manifestations of post-Western thinking, because they increasingly no longer believe in our own core values. At the same time, devoted to the climate issue, they are squandering our new energy revolution by attempting to “decarbonize,” essentially leaving the field and the financial windfall to our friends in Riyadh, Moscow, Tehran and Raqqa.

Western ethos deconstructed

As the great 15th century Arab historian Ibn Khaldun observed, societies that get rich also tend to get soft, both in the physical sense and in the head. Over the past two centuries, Western societies, propelled by the twin forces of technology and capitalist “animal spirits,” have created a diffusion of wealth unprecedented in world history. A massive middle class emerged, and the working class received valuable protections, not only in Europe and America, but throughout parts of the world, notably East Asia, which adopted at least some of the Western ethos.

Read the entire piece at the Orange County Register.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Photo by Payton Chung from DCA, USA (Polar bear protestUploaded by AlbertHerring) [CC BY 2.0], via Wikimedia Commons

San Francisco With 200,000 More People — Would we be Better Off?

Sat, 12/26/2015 - 07:00

You want something truly scary? Take a look at these mockups of what San Francisco might look like if we build all the housing that the developers say we need.

According to writer Greg Ferenstein,

The city probably needs somewhere north of 150,000 more units: most high-rises would be concentrated in the Eastern, Downtown, and mid-market areas, while every block in the entire city would need at least one 7-story building. Essentially, San Francisco would be Manhattan downtown and Paris everywhere else.

Set aside that I never want to live in Manhattan (at any price), and that the infrastructure to handle 200,000 more people would be horrendously expensive (and developers are already refusing to pay their fair share for far lower levels of need).

It’s not just “how to we build that much housing.” It’s how do we build maybe $20 billion or more worth of transportation capacity to handle that density. Manhattan has a citywide underground transit system with high capacity and no surface traffic issues. SF doesn’t, and won’t, as long as we can’t raise property taxes and refuse to charge developers for the cost of that new system.

Never mind, let’s take Ferenstein’s idea and play it out. Suppose we decided as a city that we are willing to accept a lot more density in exchange for affordability. (This is something the mayor is promoting). Let’s say that the city really needs to build highrises all over the eastern side of town (why only the east?) and put mid-rise buildings everywhere.

Let’s say we decide that 47.5 square miles of space are enough for1 million people, and that we are willing to give up everything about San Francisco that we would lose in the process.

Remember, the streets in the highrise districts in Manhattan are much broader than the streets in SF, able to handle more traffic, with big sidewalks that can handle more pedestrians – and still it’s often overwhelming.

Right now in SF, for example, I am able to walk down the streets at 5pm without being jammed in a pack of stressed-out pushing people, which is life in parts of NYC. It’s possible to able to take your young kids and your dog for a walk in a place where there’s actually room to walk.

Imagine Mission and Valencia, being packed with thousands more pedestrians. Don’t even think about the traffic.

In fact, unless we took entire streets and banned cars, forget about the bicycle lanes – they are narrow and limited and can’t easily handle say 200 percent more traffic.

But again, whatever. Let’s say that it’s elitist to try to keep the charm of a human-scale city in a world-class city like SF, which Ferenstein calls “quaint.” Let’s say that our only hope of avoiding being a city of just the rich is to build all the apartments and condos anyone could every want to build.

Let’s say we have that debate and decide that the need for affordable housing trumps all, and we will just have to live with the implications.

So what happens if we let the developers build 200,000 new units – and prices don’t come down?

That’s actually a pretty likely scenario. It’s happened in other places (NYC, for example, where lots of new housing is being built and prices are not in any way coming down.)

It’s happened in SF so far, where we have built more market-rate housing in the past four years than at any point since the 1960s, and prices continue to soar.

Ferenstein talked to an econometrics expert at a credit agency. Okay. No idea if this person has ever studied housing or housing price trends in San Francisco, but he has a model. It assumes that we have to build housing faster than the population grows. Nice.

Except that market-rate housing causes population growth as fast as it solves it – that is, if your model is the traditional capital-market model, you can’t keep up with population growth by building. You might as well try to decrease traffic by building freeways; never works, never has – not in San Francisco.

And how come we never talk about why the population is growing so fast, and why so much of that growth comes from one industrial sector that hires one type of workers?

I emailed Ferenstein with my questions, and here’s what he said:

Well, prices don’t fall here because we don’t build enough. It’s been an issue for decades. And, if you build enough units, prices will fall. You just have to build more supply than people. The question is whether it is possible to do so. But, I’m actually not advocating for that. I’m advocating for *some* solution. If the city decides it doesn’t want to grow, then it should be responsible for finding some solution where people can live and work in the same city–somewhere. Maybe it’s San Francisco. Maybe it’s Oakland. Maybe it’s a new city. But there has to be a giant metropolis somewhere. And, San Franciscans must realize, if jobs relocate elsewhere, they will suffer massive inequality and terrible commutes.

Interesting argument. Of course, we are not talking about a city where people live and work; San Francisco’s housing crisis in large part the result of people living here and commuting to Silicon Valley, on private buses. The Valley cities build no housing at all, and expect us to solve the problem.

And I would argue that if some tech jobs went elsewhere, we would have less inequality and less terrible commutes – it’s the displacement from too many people moving here for jobs when housing doesn’t exist that has created the problem. Most of San Francisco does better when there is slower growth in bubbly tech industries.

There’s a much more interesting question that we might want to address: Suppose we built may 20,000 new units, or 30,000, or 50,000, spread all over the city – and every one of them was social housing, that is, housing that was never in the private sector? Would that bring down prices? Would that provide the same level of affordability, or maybe much more, than the Manhattan West model?

Would that be a better deal?

At the very least, we would know that the new housing would be affordable, instead of taking a huge gamble that the (failed) free market, and the (failed) econometric projections of the past, would save us.

Oh, and what if we said that SF no longer wants to be the bedroom community for Silicon Valley, and will stop entitling things like private buses that make that trend possible?

That’s a bit of a different picture.

This piece originally appeared at 48hills.org.

Photo: A mockup by Alfred Two for a Medium story on what an “affordable” SF might look like

Joel on Reason.tv

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"Greenurbia is the suburbs of the future. The suburbs of the 1950s were bedroom communities for people who commuted into the city. Today, there’s much more employment in the suburbs, and the big change is the number of people working full-time or part-time at home. Having people commute from one computer screen to another doesn’t make sense."

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Kotkin has a striking ability to envision how global forces will shape daily family life, and his conclusions can be thought-provoking as well as counterintuitive. It's amazing there isn't more public discussion about the enormous changes ahead, and reassuring to have this talented thinker on the case. — Jennifer Ludden, NPR national desk correspondent

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