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Urban Renewal Needs More than ‘Garden City’ Stamp to Take Root

Wed, 07/02/2014 - 22:38

Every few years the ideals of Ebenezer Howard’s garden city utopia are resurrected in an attempt by the UK government to create new communities, and address the country’s housing crisis. Sometimes this takes the form of new towns or eco-towns, and sometimes proposals for an actual garden city are put forward – as in the last budget.

Rather than just rolling out this romantic terminology, we should take a closer look at garden city ideals and how they can be adopted to make the proposed Ebbsfleet development a success.

Several years ago my colleague Michael Edwards presciently forecast the current problems in the Thames Gateway where Ebbsfleet falls, with a dominance of private development that does little to provide for local employment and walkable communities.


Ebenezer Howard’s utopian vision

He outlined the need to return to funding principles similar to the garden city model, where development trusts retain freeholds on the land. This model, based on investment in infrastructure and services, is a fundamental principle that shifts from short-term returns to a long-term relationship created between the collective or public landowner and local inhabitants.

Lessons From History

Despite the fact that the garden city was a highly influential model throughout the first half of the 20th century, ultimately leading to the establishment of some key settlements in the UK, US and elsewhere in the world, it has had few genuine successes. After World War II, similar utopian dreams of creating model communities, with decent housing surrounding a well-designed centre, met with the reality. British reformer William Beveridge famously summed them up for having “no gardens, few roads, no shops and a sea of mud”.

You’d be forgiven for thinking that past lessons would be applied to the next generation of housing. But, even the post-war housing plans – though inspired by the garden city movement of the interwar periods – failed to plan the new housing in relation to transport, employment and public services such as shops and schools. While UK government reports have tried to draw lessons from both their positive and negative aspects, they have also been criticised in more recent reports, for lacking a sense of community – although it should also be said that “community” takes time to develop and cannot be “designed” as such.

Many of the challenges of creating new communities are bound up in the spatial separation between newcomers and older inhabitants, a lack of social infrastructure, such as doctor’s surgeries and schools, and difficulties that stem from long commutes, such as lower net income and the strain this has on families. Ruth Durant found this in her 1939 study of Burnt Oak on the outskirts of London.

Early post-war new towns were similarly criticised for their very slow build-up of health services, higher schooling, cultural facilities and decent shopping facilities, although some did better with the provision of local employment, due to many people moving to the towns with a local job linked to their housing. With shifts in the industrial economy, such beneficial connections between home and work (one of the tenets of the garden city) reduced over time.

Modern Twist

The challenges today are slightly different, however. People live more mobile and fragmented lives and are arguably less likely to be tied to place as was the case for the primarily working-class (and manual labouring) communities of the past. This poses the risk that community will be lost because of how transient people can be.

But increased mobility and social interaction don’t have to be mutually exclusive. Indeed, a lack of mobility is the worst problem that can be imposed on a community: both work and leisure must be accessible to people. Plus, with the advent of the internet and grass-roots activism, connections can traverse space more easily. This has allowed movements such as the Transition Network, which brings communities together around sustainable issues, to blossom.

Adapting to Change

UCL’s EPSRC funded Adaptable Suburbs project has studied the evolution of London’s outer suburban towns over the past 150 years, providing some clues on what has made for the relative success of the original garden cities over other planned settlements. It is clear that their success has been dependent on excellent transport connections, coupled with the provision of local employment and access to employment at a commutable distance.

Also important is the provision of a mixed-use town centre, giving a destination for a wide variety of activities in addition to retail: community activities, schools, leisure and cultural uses. Centres work well when connected to the street network, accessible by foot, bicycle, public and private transport. This multi-functional design has helped even the smallest of centres to sustain themselves through the most recent economic recession.

A recent government report, “Understanding High Street Performance”, also found that successful town centres are “characterised by considerable diversity and complexity, in terms of scale, geography and catchment, function and form … [as] a result, the way in which they are affected by and respond to change is diverse and varied".

It is almost impossible to predict how society will change in the future, particularly as new technologies have the power to change how people connect and build community. But what is evident is that here lies another essential aspect of building successful communities: in allowing for places to adapt to change.

This needs to be a foundational aspect of the government’s new cities – simply invoking the phrase “garden city” is not enough. By building places with sufficient flexibility of buildings, infrastructure and uses, coupled with links that allow for local and wider-scale trips to take place, with the necessary long-term financial investment, we can start to create places that will successfully weather the future.

This article was originally published on The Conversation.

Dr Laura Vaughan is Professor of Urban Form and Society at the Bartlett, University College London. She has been researching poverty and prosperity in cities, suburbs and the space between them for the past dozen years using space syntax – a mathematical method for modelling social and economic outcomes. Her edited book ‘Suburban Urbanities’ is due to come out in UCL Press in 2015.

Photo: Which way are the flower beds? Matt BuckCC BY-SA

The Evolving Urban Form: Chongqing

Wed, 07/02/2014 - 07:08

No city in the world is so misunderstood by analysts and the press. It is commonly asserted Chongqing is the largest city in the world. In reality it barely makes the top 50, ranking 47th.

Cities (Shi) in China are Regions and Mostly Rural

It is fundamentally a problem of semantics and a failure to comprehend the nuances of urban geography in China. The country is divided into provinces and their equivalents, which are in turn, divided into prefectures, most of which are "shi," "Shi" translates into English as "city." However, shi are completely different from any English conception of a city as "an inhabited place of greater size, population, or importance than or village" (per Merriam Webster).

There approximately 300 shis and other prefectures (sub-provincial jurisdictions) in China. In contrast, there are approximately 10 times as many sub-state jurisdictions (counties) in United States, which has a land area slightly larger than that of China. China's shi and other prefectures are thus very large. They are really more like regions in English. Virtually all shi are predominantly rural, rather than urban in their land use.

Reporters often marvel at the many cities in China of more than 1,000,000 population. Yet many of these are nothing more than broad expanses of rural areas without large urban settlements. Take, for example, Bazhong, a "shi" of 3.3 million residents in Sichuan province. The largest urban settlement occupies just 5 square miles (13 square kilometers), roughly the same land area as Goodland, Kansas (a city of fewer than 5,000 residents). Bazhong shi's population is spread across a virtually 100 percent rural landscape of 4,700 square miles (12,300 square kilometers).

Chongqing in Context

Chongqing is a shi, and is administered as a province by the national government, as also are Shanghai, Beijing and Tianjin. The province of Chongqing covers 32,000 square miles (82,500 square kilometers). This is nearly equal to the land area of Austria and more than the area of the state of Maine. No city in the world is as large as Austria.. The New York urban area comes the closest to Chongqing's size at 4,500 square miles (11,600 square kilometers), one-seventh the land area of Chongqing.

Not a Metropolitan Area

Nor is it appropriate to consider the province of Chongqing as a metropolitan area (labor market). It is simply too large for that. Commuters from the Chongqing's "Southeast Wing" would have to travel up to 5 hours, mainly on the China's 75 mile per hour (120 kilometer per hour) freeway system to reach work in the Chongqing urban area. From the outer reaches of Chongqing's "Northeast Wing," travel times could exceed 8 hours, again largely by 75 mile per hour freeway.

A Largely Rural, Not Urban Province

The province of Chongqing is predominantly rural yet The Guardian persists in telling us that "Chongqing is the fastest-growing urban centre on the planet. Its population is already bigger than that of Peru or Iraq." Not so. The 2010 Census of China placed the province of Chongqing's population at 28.8 million, smaller than both Peru and Iraq and with fewer people than in 1990. The urban center (genuine city) of Chongqing does not reach a quarter the size of either Peru or Iraq.

The Guardian is by no means alone. Time magazine cluelessly fawned "Virtually overnight, Chongqing has become the largest city not only in China, but in the world," Wired similarly misfired with indicating in a 2008 article that Chongqing (at 32 million population) was the "fastest-growing urban center on Earth." For all the supposed growth, not a soul was added to Chongqing province during the 2000s, as is described below.

Not all media outlets, however, have been captured by the same fallacy as The Guardian, Time, Wired and many others. To its credit, the BBC went to considerable lengths to correct this and similar errors about the population of Chongqing. An Atlanticarticle also parsed the issue well.

Losing Population

In reality Chongqing lost 1.7 million people between 2000 and 2010, 5.5 percent of its population. This is significant. By contrast, the municipality of Chicago lost 6.9 percent over the same period, a loss that was considered devastating. It is not surprising that Chongqing is losing population, given its principally rural nature. Much of rural China is emptying out, as people migrate to the cities for economic opportunity (which is the very purpose of cities), just as they have done in previous decades and the last two century throughout higher income nations. Every year over the past decade, the province experienced an annual decline of 170,000, not the half-million increase reported by The Guardian. The actual urban center (not the imaginary urban center reported on by The Guardian) is gaining in population, but nothing like "half a million" per year.

The Genuine City of Chongqing

There is, however, a genuine city of Chongqing. Surprisingly reminiscent of Pittsburgh, Chongqing is it nestled among elongated folded mountains that are near duplicates of those near the Pennsylvania city. The city is at the confluence to two rivers, the Yangtze and the Jialing. Like the Pittsburgh's Golden Triangle where the Allegheny and Monongahela Rivers meet, Chongqing's has an attractive open space at Chaotianmin where the two rivers meet. Finally, as in Pittsburgh, there is an impressive, high rise central business district behind the open space. This is the best example in China of a monocentric central business district typical of many US cities (downtown Shanghai and Nanjing are similar, but more spread out).



The Chongqing urban area covers little more than 1/100th of the province's land area (Figure 1) and contains less than one-quarter of the population (Figure 2). Yet the Chongqing urban area is still large. According to the 10th Annual Edition of Demographia Urban Areas, Chongqing has a 2014 population of 6.8 million living in a land area of 340 square miles (890 square kilometers). The urban population density is 19,600 per square mile (7,700 per square kilometer), which is about one third higher than the larger urban area average of 14,900 per square mile (5.700 per square kilometer) found across China. This is more than double the density of the Paris urban area, triple the density of the Los Angeles urban area and six times that of Portland.

The "One Hour Economic Circle:" The Future Metropolitan Area

Chongqing's administration has a vision of a much larger city. The urban plan is concentrated on the "One Hour Economic Circle," defined as within "one hour's driving distance." This area includes 23 of Chongqing's 40 divisions (counties and urban districts, or qu's), with a land area of 11,000 square miles (28,600 square kilometers), more than 1.5 times the size of the Paris metropolitan area (aire urbaine) and slightly larger than New York. The 2010 census counted a population of 17.6 million in the One Hour Economic Circle, but most of it still rural. Outside the One Hour Economic Circle, in what is called the "Northeast Wing" and the "Southeast Wing," the rural influence is even greater.

The intent of the urban plan is to broaden the economic influence of the urban area. This would involve substantial increases in economic interchange (principally commuting) with the balance of the One Hour Economic Circle, now decidedly rural.

Within the One Hour Economic Circle, the large rural population suggests the potential for in-situ urbanization could also contribute to economic growth as migration, as rural residents are afforded opportunities to adopt urban lifestyles (as has occurred in Quanzhou and other urban areas, especially in the province of Fuzhou).

Population Trends 2000-2010

The divisions (qu) that encompass the urban area are growing, even though the core is losing (Yuzhong qu). In contrast, the metropolitan area had a population of 8.0 million in 2010, up 19 percent from 2000. This is not particularly rapid growth for China. Nearly 20 metropolitan areas grew twice as fast from 2000 to 2010. Nearby Chengdu, the capital of Sichuan, grew 2.5 times as fast as Chongqing.

Outside the metropolitan area, the One Hour Economic Circle experienced a population loss of 12 percent. As a result of this loss, the One Hour Economic Circle had only a negligible population increase of 0.1 percent between 2000 and 2010 (Figure 3).

The Future

At the presently projected United Nations growth rate, the Chongqing urban area would add nearly one quarter to its population by 2025. But under this pattern Chongqing will barely hold its own, but remain in the top 50 world urban areas. Yet, the city has grand plans. There are nationally and locally designated economic zones, and lower business costs encouraging commerce to move west in China. As a province and urban area directly administered by Beijing, Chongqing could be positioned for both strong population and economic growth. Yet, it remains an open question whether Chongqing will emerge as one of China's major growth centers.

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Note: Shi are divided into county level jurisdictions, such as qu (urban districts), counties (rural districts) and count level shi.

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Wendell Cox is 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 was appointed to the Amtrak Reform Council to fill the unexpired term of Governor Christine Todd Whitman and has served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Photo: Downtown Chongqing (by author)

Energy Preferences to Play Big Role in November

Mon, 06/30/2014 - 06:04

The November election will be played out along all the usual social memes – from gay marriage, racism and immigration to the “war against women.” But what may determine the outcome revolves around one key economic issue: energy. This has all come to a boil now as President Obama has backed an Environmental Protection Agency effort to accelerate tougher emissions standards, something that could shutter hundreds of coal-fired power plants and slow fossil fuel development across the country.

The energy issue has become in our era what tariffs were in the 19th century: an increasingly insurmountable partition that separates Americans by region and class and which, ultimately, touches on the long-term economic trajectory of the country.

Of course, we have always had politics over energy – given regional variations in sources and kinds of supplies – but, until recently, both parties generally favored developing more oil and natural gas, largely because of the associated high-wage employment growth and potential for reducing the nation’s trade deficit. Now, energy increasingly has become a deeply partisan issue, with Democrats largely in opposition to fossil-fuel development and Republicans, fairly predictably, in support.

Reflecting this trend has been the rise of opposing sets of contributors whose primary concerns are wrapped around energy. On the Republican side, energy industry contributors, including the billionaire industrialist Koch brothers, have become increasingly dominant. More than 90 percent of campaign donations from the oil and gas industries in 2012 went to Republicans.

At the same time, environmentally focused Democratic contributors, led by hedge-fund manager Tom Steyer, have made being anti-fossil-fuel de rigueur for most candidates in the party. Steyer and his allies have become the favorite place to go for cash for Senate Majority Leader Harry Reid of Nevada and other top Democrats.

The Geography of Energy

The most-evident division – and most politically relevant – is geographic. A huge swath of the country, mainly along the Gulf Coast, Texas and the Great Plains, where shale-oil production has grown fourfold since 2007, is enjoying an energy boom that has created a surge in other high-wage, blue-collar fields such as manufacturing and construction. With the delays in approving the Keystone XL oil pipeline and looming new EPA emissions standards, Democratic senators and candidates from these states are, understandably, trying to distance themselves from their party’s increasingly anti-fossil-fuel policies.

More significant, over time, may be how energy plays out in the country’s major political battleground, the rust-belt states. Most of these states are highly dependent on coal for electricity, and some, such as Pennsylvania, Ohio and West Virginia, are seeking to develop new oil and gas finds. Policies that limit fossil-fuel development, may prove a tough sell in some districts and could cost the Democrats several additional Senate seats.

In contrast, the most fervent support for strict climate-change legislation comes mostly from states – notably, the Northeast – that produce little in the way of energy and use relatively little carbon to power their economies. These states need less power than other areas as they already have deindustrialized and have very little population growth.

Two other ultrablue bastions, California and the Pacific Northwest, also advocate a green energy position. The Northwest relies largely on hydro power for its robust industrial sector, lessening dependence on carbon-based energy for electricity. California, itself rich in fossil fuels, largely disdains its resources, and its leaders prefer, for ideological reasons, to subsidize expensive renewable energy. Roughly one-fourth of all energy used in California comes from out of state, much of it from coal. But since this “dirty” power comes from elsewhere, the progressives in places like Hollywood and Silicon Valley can still feel good about our state’s “enlightened” policies, whatever their real effect.

The Class Divide

Historically, Democrats have been big supporters of expanding the energy sector, which includes such things as dams, nuclear power plants and pipelines. But the growing influence of the green movement has reversed that. Green policies are widely embraced by largely Democratic crony capitalists in places like Silicon Valley. They also enjoy almost universal support in academia, where boycotts of fossil-fuel companies are increasingly common. The media, too, is an ally, as is the predictably progressive entertainment industry.

Rest assured, we will never see an HBO series that celebrates George Mitchell, the entrepreneur most responsible for developing fracking. But campus-climate scientists who diverge in any way from the party line on global warming are routinely excoriated as“deniers” of “settled” science, even in the face of 15 years of relatively stable global temperatures. The media has also become a fierce defender of climate orthodoxy. TheLos Angeles Times, as well as the website Reddit, have chosen to exclude contributions from skeptics.

Of course, many traditional Democrats, notably in the construction trades and manufacturing, oppose this drift. Construction unions are apoplectic about the president’s endless delays on Keystone XL, which has two-thirds support from the public. The United Mineworkers, not surprisingly, oppose the new EPA emissions limits, claiming they will cost upward of 75,000 mining jobs.

Some Ohio construction unions, incensed by green opposition to both Keystone and fracking, have shifted support to prodevelopment GOP Gov. John Kasich, despite his conflict with public employee groups. The only prominent national Democrat to identify as pro-fossil-fuel is former Montana governor Brian Schweitzer whose possible run for the presidential nomination seems a bit quixotic in a party increasing dominated by environmental activists and their gentry allies.

What Kind of America do we want?

Ultimately, the energy debate reflects a larger discussion about the future of the country and the economy. This is not merely about emissions and climate change, per se. California’s Draconian laws, even supporters admit, will have no appreciable effect on a global basis, particularly given the state’s already relatively low carbon footprint (largely a factor of the mild climate and the slow growth in its interior in recent years). Indeed, virtually all the world’s significant increases in CO2 are coming from developing countries; since 1990, China has increased its emissions almost threefold, while America’s have dropped. China now emits roughly twice as much greenhouse gas as the U.S.

Some of the steps taken by environmental and renewable-energy interests against natural gas development can even be seen as counterproductive. The U.S.’s better recordon reducing emissions reflects overwhelmingly the shift from coal to natural gas for generating electricity, which has helped the U.S. reduce its carbon emissions more than either Asia or Europe.

Fracking, like any energy technology – including wind and solar – clearly creates environmental problems. There should be strong rules to regulate fracking to make it safer, as Colorado’s Democratic Gov. John Hickenlooper has worked to pass in his state. In addition, major reductions can be achieved through a shift away from oil and coal and toward natural gas, as well as conservation efforts.

Progressives, in particular, need to focus far more on what effects an ultrahigh-cost energy economy would have on the middle and working class. More attention should be paid in accelerating the current spike in job-creating foreign investment into the country, attracted in large part by the development of low-cost, clean natural gas. In contrast, policies hostile to fossil fuels will drive industry to less-environmentally conscious countries, particularly in the developing world.

Sadly, none of this is necessary. America’s economic future is best guaranteed by marrying the successes of Silicon Valley and Hollywood with a robust blue-collar sector that includes fossil fuels, manufacturing, logistics and construction. Emissions can be cut, for the time being, by such steps as replacing coal for generating electricity, improving efficiencies, promoting telework and boosting the use of natural gas for transportation.

Dividing the country, and the electorate, into totally polarized camps over energy may benefit the consultants in both camps who feed off contentious and expensive election campaigns, but will do little to help the futures of most Americans.

This article first appeared in the Orange County Register.

Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

Photo by gfpeck

Dawn of the Age of Oligarchy: the Alliance between Government and the 1%

Sat, 06/28/2014 - 09:27

When our current President was elected, many progressives saw the dawning of a new epoch, a more egalitarian and more just Age of Obama. Instead we have witnessed the emergence of the Age of Oligarchy.

The outlines of this new epoch are clear in numerous ways. There is the diminished role for small business, greater concentration of financial assets, and a troubling decline in home ownership. On a cultural level, there is a general malaise about the prospect for upward mobility for future generations.

Not everyone is suffering in this new age. For the entitled few, these have been the best of times. With ever more concentration of key industries, ever greater advantage of capital over labor, and soaring real estate values in swanky places such as Manhattan or San Francisco which , as one journalist put it, constitute “vast gated communities where the one percent reproduces itself." The top hundred firms on the Fortune 500 list has revenues, in adjusted dollars, eight times those during the supposed big-business heyday of the 1960s.    

This shift towards oligarchy well precedes President Obama’s tenure. It was born from a confluence of forces: globalization, the financialization of the economy, and the shift towards digital technology. Obama is not entirely to blame, it is more than a bit ironic that these measurements have worsened under an Administration that has proclaimed income inequality abhorrent.

Obama’s Oligarchs

Despite this administration’s occasional rhetorical flourishes against oligarchy, we have seen a rapid concentration of wealth and depressed conditions for the middle class under Obama. The stimulus, with its emphasis on public sector jobs, did little for Main Street. And under the banner of environmentalism, green cronyism has helped fatten the bank accounts of investment bankers and tech moguls at great public expense.

Wall Street grandees, many of whom should have spent the past years studying the inside of jail cells for their misbehavior, are only bothered by how to spend their ill-gotten earnings, and how not to pay taxes on it. The Obama Administration in concert with the Congress , have consented to allow  the oligarchy to continue paying capital gains taxes well below the income tax rate paid by poor schmuck professionals, small business owners and high-skilled technical types. 

In this, both political parties are to blame. Republican fealty to the interests of the investor class has been long-standing. But Obama and the Democrats are also increasingly backed in their “progressive” causes by the very people -- Wall Street traders, venture capitalists and tech executives -- who benefit most from the federal bailouts, cheap money, low interest rates, and low capital gains tax rates.   

Large financial institutions also have benefited greatly from regulations that guaranteed their survival while allowing for increased concentration of financial assets. Indeed in the first five years of the Obama Administration the share of financial assets held by the top six “too big to fail” banks soared 37%, and now account for two-thirds of all bank assets.  

“Quantitative easing,” the government’s purchase of financial assets from commercial banks, essentially constituted a “too big to fail” windfall to the largest Wall Street firms, notes one former high-level official. By 2011, pay for executives at the largest banking firms    hit new records, just three years after the financial “wizards” left the world economy on the brink of economic catastrophe. Meanwhile, as “too big to fail” banks received huge bailouts, the ranks of  community banks continues dropping to the lowest number since the 1930s, hurting, in particular, small businesspeople that depend on loans from these institutions.

This tilt towards of the financial elites, as Elizabeth Warren has noted, occurred during both the Bush and Obama Administrations. “The government’s most important job,” she remarks, “was to provide a soft landing for the tender fannies of the banks.”

Warren’s observation reflects the influence exercised by the oligarchs in both parties, a bipartisan alliance of the super-rich to buy government influence and protect theior wealth. A recent Mercatus Center report found that politically connected banks received larger bailouts from the Federal Reserve during the financial crisis than financial institutions that spent less or nothing on lobbyingand contributions to political campaigns. Another study by two University of Michigan economist found a strong correlation between receiving TARP assistance and a company’s degree of connectedness to members of congressional finance committees.

As well as they have done lately, Wall Streeters have not been the only oligarchs to thrive under Obama. The tech industry, once an exemplar of dynamic capitalism, has become increasingly dominated by a handful of firms and their venture capital backers. These tech fortunes are greatly enhanced by monopolistic control of key markets, whether in search (Google); computer operating systems (Microsoft); internet retail sales (Amazon); or social media(Facebook). All of the tech giants are incessantly trying to extend their dominion into control of people’s lives, whether by tying them to a device, like the newAmazon phone, or by re-selling people’s data to advertising.

These tech companies, which author Rebecca MacKinnon (labels) calls “the sovereigns of cyberspace,” all enjoy strong, even intimate, ties to the Obama Administration. They have little reason to fear anti-trust crackdowns or scrutiny of their increasingly gross violations of privacy from friendly government lawyers.

Of course, if thing ever soured with the Democrats, the oligarchs can always look for benefactors among Republicans legislators, as Facebook and Google are already doing,. After all, most Republicans, particularly in the Senate, embraced the bailout of the large financial institutions -- the very essence of the crony capitalism that favors large, well-connected institutions over smaller ones.

For the most part, the oligarchs have lined up with Obama from the start. Indeed, at his first inaugural, notes one sympathetic chronicler, the biggest problem for donors was to find sufficient parking space for their private jets. As an observer at the left-leaning Huffington Post put it, “the rising tide has lifted fewer boats during the Obama years -and the ones it's lifted have been mostly yachts.”      

The War Against Small Business

If Obama has proven a god-send for the oligarchs, he has been less solicitous of small business. Long a key source of new jobs, small business start-ups have declined as a portion of all business growth from 50 percent in the early 1980s to 35% in 2010. Indeed, a 2014 Brookings report, revealed small business “dynamism,” measured by the growth of new firms compared with the closing of older ones, has declined significantly over the past decade, with more firms closing than starting for the first time in a quarter century.

There are many explanations for this decline, including the impact of offshoring, globalization and technology. But much can be traced to the expansion of regulatory power. Small firms, according to a 2010 report by the Small Business Administration, spend one-third more per employee than larger firms on staff  who can help them meet with federal dictats. The biggest hit to small business comes from environmental regulations, which cost 364% per employee more for small firms than large ones. Small business owners and self-employed professionals also have also been among those most impacted, through the cancellations of their health care policies, by the Affordable Care Act.

The Politics of Oligarchy

To be sure, every society has its Oligarchs, those who take leadership and lay foundations for the future. Economically, the oligarchs are necessary as creators and investors in new economic potential. The great 19th century robber barons, though often exceedingly ruthless in their practices, left an enormous legacy in the form of industries such as steel, utilities and railroads that underpinned the industrial era. But only later, due to reforms and the further expansion of the economy, did the oligarch’s work translate into mass affluence.

The need to put limits on oligarchic power was clear to leaders such as Theodore Roosevelt who labeled his era’s moguls as “malefactors of great wealth.” In the early 20th century, many progressives and populists, as well as a growing socialist movement, rose to oppose oligarchy. But for most this was not so much an anti-capitalist, or even anti-market movement as a concern great power and wealth concentrated in the hands of the few. That seem fear of concentrated, anti-democratic power worried the founders, like Jefferson and Madison, who confronted a very different kind of oligarchy during the war for independence. 

“We can have democracy in this country, or we can have great wealth concentrated in the hands of a few,” Supreme Court justice Louis Brandeis once noted, “but we can't have both.”

These sentiments are still valid. Many, if not most Americans, recognize that our political economy is not working for the majority of the country. The vast majority recognize the reality of crony capitalism and understand that government contracts go to the politically connected. More troubling still, less than one third believe the country even operates under a free market system. Most suspect that the American dream is falling increasingly out of reach. By margins of more than two to one, Americans say they enjoy fewer economic opportunities than their parents, and that their offspring will have far less job security and disposable income.     

Today, Americans increasingly see the same threat Brandeis saw. American politics has ceased to function as a rising democracy and come to resemble an emerging plutocracy. These days, political choice is fought over by dueling groups of billionaires appealing to right and left to see who will best look after their interests. This can be seen in the emergence of conservative oligarchs like the energy billionaire Koch Brothers or the heirs to the Wal-mart fortune, who have emerged as the ultimate bêtes  noires for Democrats like Senate Majority Leader Harry Reid.

Yet Reid and other Democrats have less problem with their own oligarchs. Among the .01 percent wealthiest Americans who increasingly dominate political giving, the largest contributions besides the conservative Club for Growth went to Democrat aligned groups such as Emily’s list, Act Blue and Moveon.org. Seven of the ten Congressional candidates most dependent on the money of the ultra-rich were Democrats. In 2012, President Obama won eight of the country’s ten wealthiest counties, sometimes by margins of two-to-one or better. He also triumphed easily in virtually all the top counties with the highest concentrations of millionaires and among wealthy hedge fund managers.  

The Oligarchs pervasive influence buying from both parties undermines the very structure of the democratic system as well as a competitive economy. It allows specific interests -developers, Wall Street, Silicon Valley, renewable or fossil fuels producers - enormous  range to make or break candidates. As the powerful battle, the middle classes increasingly become spectators.  It’s not far off from the decadent phase at the end of Greek democracy or the late Roman Republic, examples that resonated with our classically educated founders.

Many Americans today are alarmed, and rightfully so, by this concentration of wealth and power. But right now this grassroots reaction mainly finds its expression from the political fringes. The Tea Party, for example, had its origins in opposition to the bank bailouts that followed the financial crisis. This, not surprisingly, has made some large bank executives as wary of this right-wing movement as they were of Occupy Wall Street.

In contrast, the oligarchs have little to fear from the mainstream of either party, though there are signs that smoke is wafting over the political horizon. The defeat of house majority leader Eric Cantor partly reflected concern over his incessant lobbying and cozying up to Wall Street. Similarly, nascent opposition to Hillary Clinton’s corporatist campaign is coming from at least some Democrats, notably Massachusetts Senator Elizabeth Warren. The recent shift leftwards of the Democratic Party, epitomized by New York’s Bill de Blasio but spreading nationwide testifies to growing unrest among the grassroots.

These voices, both right and left, are still far from the main corridors of federal power but they are getting closer. The oligarchs should not rest too comfortably. An observer of gilded age America may have also assumed that the oligarchic power of the robber barons and industrial magnates would continue to wax inexorably. Yet, there comes a time -- as occurred in the early years of the last century and again in the 1930s -- when the political economy so poorly serves the vast majority that it ignites a political prairie fire. We are not there yet, in either party, but if the corrupt bargain between the oligarchs and the political class goes unbroken, the wait may not be long.

This story originally appeared at The Daily Beast..

Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. His next book The New Class Conflict is now available for pre-order. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

Barack Obama photo by Bigstock.

The Cities Stealing Jobs From Wall Street

Fri, 06/27/2014 - 09:04

When we think about American finance, the default image is of a pinstriped banker on Wall Street. But increasingly financial services is shifting away from the traditional bastions of money.

In an analysis of recent and longer-term employment trends, we have identified the large cities –those with over 450,000 jobs – that are gaining jobs in financial services, a sector that employs 7.9 million people nationwide.  Overwhelmingly, the fastest growth has been in cities not associated with high finance, but largely low-cost Sun Belt cities, which account for seven of the top 10 large metro areas on our list.

View the Best Cities for Manufacturing Jobs 2014 List

In first place: Phoenix-Mesa-Glendale, Ariz., where financial employment has expanded 12.3% since 2008 and a remarkable 7.2% last year. Close behind in second through fourth are San Antonio-New-Braunfels, Texas, Austin-Round Rock-San Marcos, Texas, and Nashville-Murfreesboro-Franklin, Tenn. These metro areas have advantages beyond just warmer weather; all are places with affordable housing and no state income taxes.

The three metro areas outside the Sun Belt in our top 10 also enjoy lower levels of taxation and housing prices. St. Louis, Mo. (fifth), Salt Lake City (seventh), and Richmond, Va. (ninth), have begun to bulk up on financial jobs, largely to the detriment of the traditional money centers New York (44th), San Francisco (48th), Boston (55th), Los Angeles (57th) and Chicago (61st). Despite the current stock market boom, and good times for large banks, financial services employment in these cities has been stagnant in recent years. Since 2008, New York has lost 3.8% of all its finance-related jobs, while Los Angeles’ financial sector has shed 7% of its jobs and Chicago 6.7%.

Why Financial Services  Are Moving

Current financial trends—accelerated By TARP and “too big to fail” regulations—have ledto a growing concentration of banking and financial services in the six largest money-center banks.  In the first five years of the Obama administration the share of financial assets held by the top six banks soared 37% to account for two-thirds of all bank assets.

But as we have seen in other industries, that domination of market share don’t necessarily drive employment growth where the big banks are headquartered. Increasingly we are seeing the rise of what urban analyst Aaron Renn describes as the “executive headquarters,” where only elite employees and their support staff remain while the vast majority of jobs migrate to lower-cost places.

Given the advances in telecommunications technology, many of the core functions of banks can be conducted anywhere. Why have a midlevel salesperson or mortgage loan processor occupy expensive Manhattan office space when they could function as effectively from much cheaper space in Phoenix, Saint Louis or Richmond?

Pundits like to speak about “face to face” contact as critical in financial services. This may be true for putting together mergers or IPOs, or to concoct the latest derivative, but it doesn’t matter in taking care of customer questions, monitoring credit cards or administering offices in suburban strip malls.

The People Advantage

These smaller cities have advantages for both the financial institutions and their employees. For one thing, the cost of employees is much lower. According to salary reporting website Payscale.com, the median financial manager in New York or San Francisco costs $90,724 to $98,783, respectively; while one in Phoenix costs only $77,467.

But this is not just good for the companies. Employees who make less in St. Louis, Phoenix or Dallas often live far better than their counterparts who earn higher salaries in the traditional money centers. One big reason is housing costs, which are a third to half cheaper in the top cities on our list than in places like Boston (2013 median home price of $375,900) New York ($465,700), or San Francisco ($679,200).  Compare that to $183,600 in top-rated Phoenix or $171,000 in San Antonio-New Braunfels.  Even in Austin, with its surging growth in technology and its role as state capital and home to a huge public university, the median home costs a relatively affordable $222,900, according to the National Association of Realtors.

Sometimes it‘s not just lower costs. If you are servicing Spanish-language customers, for example, a location in San Antonio, Phoenix or Austin with their large Spanish-speaking workforces might prove convenient. If you are interested in trade finance, Texas, now the leading export state, might prove attractive. Firms concentrating on mortgages might also see advantages in locating in places like Nashville, Phoenix, Austin, Dallas and San Antonio, which are all expected to add many more households, according to a recent Pitney Bowes  survey, than much slower-growing locales in California or the Northeastern seaboard.

And then there is the unique case of Salt Lake, another emerging financial powerhouse. Mormons’ linguistic skills have attracted loads of big international companies, such as Goldman Sachs, who need people capable of conversing in Lithuanian, Chinese and Tongan. Goldman has 1,400 employees in Salt Lake City, making it the investment bank’s sixth largest location worldwide.

Future Trends

People tend to see the growth of the biggest banks as confirming the notion that economic opportunity will continue to be concentrated in our elite, expensive cities. Yet in reality urban growth patterns seem to suggest that these cities cannot easily accommodate mid-skill or middle-management jobs. So even as decision-making remains ensconced in New York,  Boston  or Chicago, the flow of the vast majority of financial jobs should continue to head outward.

This competition may become all the greater if, as Deloitte predicts, financial service employment begins to spike with a long-term economic recovery. Nor will the emerging financial states be satisfied long-term with the bottom end of the financial employment pool. Palm Beach, Fla., for example, has set up an office to lure hedge funds out of the New York area, touting warm weather and much lower taxes.

Increasingly, some New York financial institutions are starting movemore critical roles to lower-cost areas, like investment advisory and technology jobs. Places like St. Louis, where the industry has grownand approaches critical mass, seem to be in position to make a serious bid for higher-end  jobs.

Although no one expects Phoenix or Salt Lake City to overtake Manhattan as the financial center of the world, over time we can expect these cities to develop into important banking centers. Just as the move of automakers to the Southeast and tech companies to Austin, Salt Lake City and Raleigh remade the economic map of those industries, the shift of financial services to the new centers might eventually do the same in that sector as well.

View the Best Cities for Manufacturing Jobs 2014 List

This story originally appeared at Forbes.

Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

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

Photo: robotography

Dallas: A City in Transition

Wed, 06/25/2014 - 22:38

I was in Dallas this recently for the New Cities Summit, so it’s a good time to post an update on the city.

I don’t think many of us realize the scale to which Sunbelt mega-boomtowns like Dallas have grown. The Dallas-Ft. Worth metro area is now the fourth largest in the United States with 6.8 million people, and it continues to pile on people and jobs at a fiendish clip.

Many urbanists are not fans of DFW, and it’s easy to understand why. But I think it’s unfair to judge the quality of a city without considering where it is at in its lifecycle. Dallas has been around since the 1800s, but the metroplex is only just now starting to come into its own as a region. It is still in the hypergrowth and wealth building stage, similar to where a place like Chicago was back in the late 19th century. Unsurprisingly, filthy, crass, money-grubbing, unsophisticated Chicago did not appeal to the sophisticates of its day either. But once Chicago got rich, it decided to get classy. Its business booster class endowed first rate cultural institutions like the Art Institute, and tremendous efforts were made to upgrade the quality of the city and deal with the congestion, pollution, substandard housing, and fallout from rapid growth, which threatened to choke off the city’s future success. At some point in its journey, Chicago reached an inflection point where it transitioned to a more mature state. One can perhaps see the 1909 Burnham Plan as the best symbol of this. In addition to addressing practical concerns like street congestion, the Burnham Plan also sought to create a city that could hold its own among the world’s elite. And you’d have to argue the city largely succeeded in that vision.

The DFW area is now at that transition point. They realize that as a city they need to be about more than just growth and money making. They need to have quality and they need to address issues in the system. Much like Burnham Plan era Chicago, this perhaps makes DFW a potentially very exciting place to be. It’s not everyday when you can be part of building a new aspirational future for a city that’s already been a successful boomtown. The locals I talked to were pretty pumped about their city and where it’s going.

How true this is I don’t know, but some people have attributed a change in mindset to the loss in the competition to land Boeing’s headquarters. Boeing ended up choosing Chicago over Dallas. In part this was because Chicago bought the business with lavish subsidies that far outclassed what Dallas put on the table. But it was also because Boeing saw Chicago as a more congenial environment for global company C-suite and other top executives to be, both from a lifestyle perspective and that of access to other globally elite firms and workers available in Chicago.

Meanwhile, the cracks in the DFW growth model were becoming apparent, especially in the core city of Dallas. Ten years ago the Dallas Morning News ran a series called “Dallas at a Tipping Point: A Roadmap For Renewal.” This series was underpinned by a report prepared by the consulting firm Booz Allen. This report is well worth reading by almost anyone today as it is a rare example of a city that was able to get insight and recommendations from the type of tier one strategy firm used by major corporations. Booz Allen was direct in their findings, though perhaps with a bit of hyperbole in the Detroit comparison:

Dallas stands at the verge of entering a cycle of decline…On its current path, Dallas will, in the next 20 years, go the way of declining cities like Detroit – a hollow core abandoned by the middle class and surrounded by suburbs that outperform the city but inevitably are dragged down by it.

….

If the City of Dallas were a corporate client, we would note that it has fallen significantly behind its competitors. We would warn that its product offering is becoming less and less compelling to its core group of target customers…We would further caution the management that they are in an especially dangerous position because overall growth in the market…is masking the depth of its underlying problems. We would explain that in our experience, companies in fast growing markets are often those most at risk because they frequently do not realize they are falling behind until the situation is irreversible.

Put into the language of business, we would note that Dallas is under-investing in its core product, has not embraced best practices throughout its management or operations, and is fast becoming burdened by long term liabilities that could bankrupt the company if the market takes a downturn.

The city responded in a number of ways, some of which were similar to Chicago at its inflection point. Many of these involve various urbanist “best practices” or conventional wisdom type trends.

By far the most important of these was adopting modern statistically driven policing approaches. As crime plummeted in places like New York during the 1990s, Dallas did not see a decline of its own. But with the expansion of police headcount and adoption of new strategies by new police chief David Kunkle in 2004 – and no doubt some help from national trends – crime fell steeply during the 2000s. The Dallas Morning News says that the city’s violent and property crime rates fell by a greater percentage than any other city with over one million residents over the last decade. In 2013, Dallas had its overall lowest crime rate in 47 years.

This is critical because nothing else matters without safe streets. I’ve had many a jousting match with other urbanists on discussion boards about where crime falls on the list of priorities. In my view it’s clearly #1 – even more so than education. It’s simply a prerequisite to almost any other systemic good happening in your cities. Students can’t learn effectively if they live and attend school in dangerous environments, for example. NYU economist Paul Romer made this point forcefully in his New Cities keynote, saying that fighting crime is the most important function of government and that if you don’t deliver on crime control your city will go into decline. Fortunately, Dallas seems to have gotten the message.

But there’s been attention to physical infrastructure as well. The area has built America’s largest light rail system (which was in the works since the early 1980s).




Dallas Area Rapid Transit (DART) light rail train. Source: Wikipedia

Both the city and region remain fundamentally auto-centric, however, and this is unlikely to change.

There’s been a significant investment in quality green spaces. A major initiative called theTrinity River Project is designed to reclaim the Trinity River corridor through the city as a recreational amenity. This is underway but proceeding slowing. Among the aspects of the project is a series of three planned signature bridges designed by Santiago Calatrava. The only one completed is the Margaret Hunt Hill Bridge.




The Margaret Hunt Hill Bridge in Downtown Dallas. Designed by Santiago Calatrava. Source: Wikipedia

The single bridge tower is quite an imposing presence on the skyline. However, the size of the bridge creates an awkward contrast with the glorified creek that is the Trinity River. It looks to me like they significantly over-engineered what should have been a fairly straightforward flood plain to span just so they could create a major structure.

Another green space project – and the best thing I saw in my trip to Dallas – is Klyde Warren Park, which is built on a freeway cap. About half the cost came from $50 million donations. I’ll be going into more detail on this in my next installment, but here’s a teaser photo:




Klyde Warren Park. Source: Wikipedia

The Calatrava bridge shows that Dallas has embraced the starchitect trend. This was also on display in the creation of the Dallas Arts District. Complementing the Dallas Museum of Art are a billion dollars worth of starchitect designed facilities including Renzo Piano’s Nasher Sculpture Center, IM Pei’s symphony center, Norman Foster’s Winspear Opera House, and OMA’s Wyly Theatre.




Dee and Charles Wyly Theatre. Designed by OMA’s Joshua Prince-Ramus (partner in charge) and Rem Koolhaas

This arts district – which naturally Dallas boasts is the world’s largest – along with the other major investments that were funded with significant private contributions show a major advantage Texas metros like DFW and Houston have: philanthropy. These are new money towns on their way up and local billionaires are willing to open their wallets bigtime in an attempt to realize world class ambitions, exactly the way Chicago’s did all those decades back.

By contrast many northern tier cities are dependent on legacy philanthropy, such as foundations set up in an era when they were industrial power houses. This is a dwindling inheritance. What’s more, what wealthy residents they do have are as likely to be taking money out of their cities through cash for cronies projects than they are to be putting it in. Thus they can be a negative not positive influence.

This shows the importance of wealth building in cities. Commercial endeavors can appear crass or greedy at times, and deservedly so. But without wealth, you can’t afford to do anything. There’s a reason Dallas could build America’s largest light rail system – it had the money to do so. Similarly with this performing arts district. To be a city of ambition requires that a place also be an engine of wealth generation.

I’m sure that Dallas’ moneyed elite are well taken care of locally and exert outsized influence on decision making. I don’t want to make them out to be puristic altruists. But they’ve shown they are willing to open their wallets in a serious way, something that’s not true everywhere.

This is a flavor of what Dallas has been up to. It’s too early to say whether the city will make the same transition Chicago did. Its greatest challenge also awaits some time in the future. When DFW’s hypergrowth phase ends and the city must, like New York and Chicago before it, reinvent itself for a new age, that’s when we will find out if DFW has what it takes to join the world’s elite, or whether it will fade like a flower as Detroit and so many other places did.

Toyota did just announce it’s moving 3,500 jobs to north suburban Plano. But corporations have long seen Dallas a place for large white collar operations. Boeing was what I call an “executive headquarters” – a fairly small operation consisting of only the most senior people. I haven’t seen Dallas win any of these as of yet.

The Dallas Morning News takes a somewhat mixed view on the city itself. They just did a special section called “Future Dallas: Making Strides, Facing Challenges,” the title of which sums it up. Dallas has put a lot of pieces on the board and made major progress on areas like crime, but it’s failed to make a dent in others, such as Booz Allen’s call to make the city more attractive to middle class families. Poverty is actually up since then, and the city is increasingly unequal in its income distribution. Dallas is not unique in that, but that’s cold comfort.

Despite gigantic regional growth, the city’s population has been nearly flat. Despite the vaunted Texas and DFW jobs engine, Dallas County has lost about 100,000 jobs since 2000. The core is clearly continuing in relative decline, and the Dallas County job losses are particularly troubling. I’m no believer in this idea that everybody is going to abandon the suburbs and head back to the city. But as former Indianapolis Mayor Bill Hudnut put it, you can’t be a suburb of nowhere. If the core loses economic vitality, the entire DFW regional will take a hit to its growth.

Aaron M. Renn is an independent writer on urban affairs and the founder of Telestrian, a data analysis and mapping tool. He writes at The Urbanophile, where this piece originally appeared.

Dallas photo by Bigstock.

New York, Legacy Cities Dominate Transit Urban Core Gains

Tue, 06/24/2014 - 22:38

Much attention has been given the increase in transit use in America. In context, the gains have been small, and very concentrated (see: No Fundamental Shift to Transit, Not Even a Shift). Much of the gain has been in the urban cores, which house only 14 percent of metropolitan area population. Virtually all of the urban core gain (99 percent) has been in the six metropolitan areas with transit legacy cities (New York, Chicago, Philadelphia, San Francisco, Boston, and Washington).

In recent articles, I have detailed a finer grained, more representative picture of urban cores, suburbs and exurbs than is possible with conventional jurisdictional (core city versus suburban) analysis. The articles published so far are indicated in the "City Sector Articles Note," below.

Transit Commuting in the Urban Core

As is so often the case with transit statistics, recent urban cores trends are largely a New York story. New York accounted for nearly 80 percent of the increase in urban core transit commuting. New York and the other five metropolitan areas with "transit legacy cities" represented more than 99 percent of the increase in urban core transit commuting (Figure 1). This is not surprising, because the urban cores of these metropolitan areas developed during the heyday of transit dominance, and before broad automobile availability. Indeed, urban core transit commuting became even more concentrated over the past decade. The 99 percent of new commuting (600,000 one-way trips) by transit in the legacy city metropolitan areas was as well above their 88 percent of urban core transit commuting in 2000.

New York's transit commute share was 49.7 percent in 2010, well above the 27.6 percent posted by the other five metropolitan areas with transit legacy cities. The urban cores of the remaining 45 major metropolitan areas (those over 1,000,000 population) had a much lower combined transit work trip market share, at 12.8 percent.

The suburban and exurban areas, with 86 percent of the major metropolitan area population, had much lower transit commute shares. The Earlier Suburban areas (generally median house construction dates of 1946 to 1979, with significant automobile orientation) had a transit market share of 5.7 percent, the Later Suburban areas 2.3 percent and the Exurban areas 1.4 percent (Figure 2).

The 2000s were indeed a relatively good decade for transit, after nearly 50 years that saw its ridership (passenger miles) drop by nearly three-quarters to its 1992 nadir. Since that time, transit has recovered 20 percent of its loss. Transit commuting has always been the strongest in urban cores, because the intense concentration of destinations in the larger downtown areas (central business districts) that can be effectively served by transit, unlike the dispersed patterns that exist in the much larger parts of metropolitan areas that are suburban or exurban. Transit's share of work trips by urban core residents rose a full 10 percent, from 29.7 percent to 32.7 percent (Figure 3).

There were also transit commuting gains in the suburbs and exurbs. However, similar gains over the next quarter century would leave transit's share at below 5 percent in the suburbs and exurbs, because of its small base or ridership in these areas.

Walking and Cycling

The share of commuters walking and cycling (referred to as "active transportation" in the Queen's University research on Canada's metropolitan areas) rose 12 percent in the urban core (from 9.2 percent to 10.3 percent), even more than transit. This is considerably higher than in suburban and exurban areas, where walking and cycling remained at a 1.9 percent market share from 2000 to 2010.

Working at Home

Working at home (including telecommuting) continues to grow faster than any work access mode, though like transit, from a small base. Working at home experienced strong increases in each of the four metropolitan sectors, rising a full percentage point or more in each. At the beginning of the decade, working at home accounted for less work commutes than walking and cycling, and by 2010 was nearly 30 percent larger.

The working at home largest gain was in the Earlier Suburban Areas, with a nearly 500,000 person increase. Unlike transit, working at home does not require concentrated destinations, effectively accessing employment throughout the metropolitan area, the nation and the world. As a result, working at home's growth is fairly constant across the urban core, suburbs and exurbs (Figure 4). Working at home has a number of advantages. For example, working at home (1) eliminates the work trip, freeing additional leisure or work time for the employee, (2) eliminates greenhouse gas emissions from the work trip, (3) expands the geographical area and the efficiency of the labor market (important because larger labor markets tend to have greater economic growth and job creation, and it does all this without (4) requiring government expenditure.

Driving Alone

Despite empty premises about transit's potential, driving remains the only mode of transport capable of comprehensively serving the modern metropolitan area. Driving alone has continued its domination, rising from 73.4 percent to 73.5 percent of major metropolitan area commuting and accounting for three quarters of new work trips. In the past decade, driving alone added 6.1 million commuters, nearly equal to the total of 6.3 million major metropolitan area transit commuters and more than the working at home figure of 3.5 million. To be sure, driving alone added commuters in the urban core, but lost share to transit, dropping from 45.2 percent to 43.4 percent. In suburban and exurban areas, driving alone continued to increase, from 78.2 percent to 78.5 percent of all commuting.).

Density of Cars

The urban cores have by far the highest car densities, despite their strong transit market shares. With a 4,200 household vehicles available per square mile (1,600 per square kilometer), the concentration of cars in urban cores was nearly three times that of the Earlier Suburban areas (1,550 per square mile or  600 per square kilometer) and five times that of the Later Suburban areas (950 per square kilometer). Exurban areas, with their largely rural densities had a car density of 100 per square mile (40 per square kilometer).

Work Trip Travel Times

Despite largely anecdotal stories about the super-long commutes of those living in suburbs and exurbs, the longest work trip travel times were in the urban cores, at 31.8 minutes one-way. The shortest travel times were in the Earlier Suburbs (26.3 minutes) and slightly longer in the Later Suburbs (27.7 minutes). Exurban travel times were 29.2 minutes. Work trip travel times declined slightly between 2000 and 2010, except in exurban areas, where they stayed the same. The shorter travel times are to be expected with the continuing evolution from monocentric to polycentric and even "non-centric" employment patterns and a stagnant job market (Figure 5).

Contrasting Transportation in the City Sectors

The examination of metropolitan transportation data by city sector highlights the huge differences that exist between urban cores and the much more extensive suburbs and exurbs. Overall the transit market share in the urban core approaches nine times the share in the suburbs and exurbs. The walking and cycling commute share in the urban core is more than five times that of the suburbs and exurbs. Moreover, the trends of the past 10 years indicate virtually no retrenchment in automobile orientation, as major metropolitan areas rose from 84 percent suburban and exurban in 2000 to 86 percent in 2010. This is despite unprecedented increases is gasoline prices and the disruption of the housing market during worst economic downturn since the Great Depression.

----------------------------

Wendell Cox is 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 was appointed to the Amtrak Reform Council to fill the unexpired term of Governor Christine Todd Whitman and has served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Photograph: DART light rail train in downtown Dallas (by author)

----------------------------

City Sector Note: Previous articles in this series are listed below:

From Jurisdictional to Functional Analyses of Urban Cores & Suburbs

The Long Term: Metro American Goes from 82 percent to 86 percent Suburban Since 1990

Functional v. Jurisdictional Analysis of Metropolitan Areas

City Sector Model Small Area Criteria

Enterprising States 2014: Re-creating Equality of Opportunity

Mon, 06/23/2014 - 22:38

This is the executive summary for the U.S. Chamber of Commerce Foundation's 5th Annual Enterprising States report, authored annually by Praxis Strategy Group. View the interactive map with state-by-state data and download the full report here.

The growing skills gap is one of the most persistent challenges affecting thriving and lagging state economies—the disparity between the skills companies need to drive growth and innovation versus the skills that actually exist within their organizations and in the labor market. This disconnect, expected to grow substantially as the boomer generation retires, causes workers and companies to miss out on realizing their full potential. A sizable skills gap impacts virtually every aspect of the economy, thereby affecting our national competitiveness and, in turn, causing the economy to fall short of its potential.

The nature of the skills gap that employers face varies by geography. Each state has its own economic DNA with varying levels of growth and specialization for each industry. The energy-related skills gap in Texas or North Dakota, for example, is different from a manufacturing-driven gap in Michigan, aerospace in Washington, information technology in Utah, or the chemical industry in Louisiana.

Businesses and the public sector must work side by side to identify where there is a deficit of talent, reskill incumbent workers, and skill new entrants into the workforce to close the gaps within their communities. This is not a problem that can be solved quickly, but it can be solved. Strengthening America’s science, technology, engineering, and mathematics (STEM) and middle-skills pipeline will require public-private partnerships as well as collaborations across federal, state, and local governments.

States as a Focal Point for Action

States and their governors play a pivotal role in filling the talent pipeline, providing critical leadership to link businesses with the education, workforce, and economic development systems. Solutions will vary by state of course, but there is an emerging framework built on a foundation of both basic education and an employer-responsive workforce pipeline.

Economic development starts with strong schools focused on 21st century skills. For the past three decades, efforts by U.S. businesses, government, and educational organizations focused on retooling K–12 science, mathematics, and reading education and on addressing persistently high dropout rates in inner cities. Progress has been slow to remedy the looming skills shortage, but there is a growing sense of optimism that industry sector partnerships, greater attention to career pathways, and the implementation of integrated education and training will help to close the gap.

An employer-responsive talent pipeline requires aligning education, workforce development, and economic development. Postsecondary education institutions now get a considerably lower percentage of their funding from state sources than just a decade ago, but states continue to make significant financial investments in higher education. Yet, a common refrain is that postsecondary offerings—at both two- and four-year institutions—are not sufficiently aligned with the skills needed in the workforce. For years, knowledge creation, research and development, and technology transfer have dominated higher education’s economic development role. However, higher education’s most important contribution to state economic competitiveness in the future might be teaching and talent production because states with the most high-level talent will have a leg up in the future economy of decentralized global networks.

Investing in people is perhaps the most effective long-term economic growth strategy. Training and education offer the best chance for workers to find well-paying long-term employment, while providing businesses and employers in every sector with the talent they need to grow.

Coordinating education, workforce development, and economic development has proven to be challenging among the states because the three fields are historically separate systems, with separate cultures and perspectives. States that are successful in navigating program integration and facilitating collaboration between these traditionally separate institutions will put themselves in the forefront of meeting one of the primary challenges to building a 21st century economy.

Because of these complexities, a governor serves the issue best by playing a leadership role in forming partnerships – particularly between business and education – and creating the structure to ensure effectiveness and efficiency in a demand-driven education to workforce pipeline. Often this involves a decentralized approach so that more decisions can be made at the local level.

Enterprising States 2014

Now in its fifth edition, the Enterprising States study measures state performance overall and across five policy areas important for job growth and economic prosperity. Those five areas include:

  • Talent Pipeline
  • Exports and International Trade
  • Technology and Entrepreneurship
  • Business Climate
  • Infrastructure

The 2014 report relates these policies and practices to the need for collaboration between education, workforce development, and economic development to positively combat the nation's growing skills gap.  

Top Performers

Utah lands in the top 6 in each of the five policy categories and 3rd in overall economic performance. It is the only state to finish in the top 10 on all six lists.

Colorado appears on 5 top 10 lists, Texas on 4, and Washington is in the top 15 of five lists.

North Dakota is another strong performer, leading by a large margin in economic performance and ranking 1st in talent metrics and 9th in business climate.

Florida and Nevada rank well on many policy measures, a sign that the economies of those states may be ripe for a turnaround.

Virginia ranks 5th in technology and entrepreneurship, and talent metrics, helping it land just outside the top 10 in economic performance.

Minnesota ranks 10th in economic performance, partly due to its second place in talent pipeline. 

See how your state ranks by viewing our interactive map. Or view a PDF of the full report.

Enterprising States is authored by Praxis Strategy Group along with Joel Kotkin. Praxis Strategy Group is an economic research, analysis, and strategic planning firmJoel Kotkin is executive editor of NewGeography.com and author of the forthcoming The New Class Conflict.

European Style Going Out of Fashion at Ballot Box

Sun, 06/22/2014 - 22:38

The recent political earthquake in Europe has great implications for the United States, both internationally and domestically. The unpopularity of European Union institutions produced record-breaking votes for a motley assortment of anti-establishment parties across the Continent, suggesting it’s time to stop looking across the Atlantic for role models as Europe’s dismal prospects have inspired the lowest levels of political support in several decades.

Many of the parties that did best in the May 25 multinational balloting for the European Parliament – from Greece’s Far Left Syriza party to Britain’s oddball United Kingdom Independence Party and France’s historically racist National Front – are hardly ideal candidates for responsible governance. Yet, despite their many blemishes, these and other anti-EU parties fed on growing distaste for the 28-nation EU’s sprawling, largely unaccountable bureaucracy blamed for, in the words of one British group, “undermining” liberal democracy in these countries.

This suggests that it’s time for Americans to stop looking across the Atlantic for role models. For decades, American gentry liberals have seen the EU as a superior mode of governance. Jeremy Rifkin’s 2005 book, “The European Dream” – and a host of similar tracts that all assert European superiority – now may seem absurd on their faces, but it’s doubtful many EU boosters, here and abroad, will let facts get in their way.

The Urge to Merge

The bigger loser in the May elections was the notion that more concentration of power leads to better results. Many American intellectuals and policy wonks favor handing ever-greater control to the “best and brightest” who run academia, much of the media and the bureaucracy. Figures, such as former Obama budget adviser Peter Orszag and New York Times columnist Thomas Friedman, argue 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. This notion suggests the popular will is too lacking in scientific judgment and societal wisdom to be trusted with real authority.

Yet, as the EU parliamentary elections suggest, people object to having details of their lives controlled from a great distance. Beyond the Right, many on the Left also nowoppose the Brussels-based EU for imposing austerity measures on several struggling economies. The British website Socialist Alternative saw the vote not just as a shift to the right but “a revolt against the capitalist establishment,” which remains, like the bureaucracy and media, devotedly pro-EU.

In the United States, there is also mounting resistance to centralization. The 2010 congressional elections reflected a reaction to attempts by President Obama and his Democratic Party to put more of our lives under Washington’s control. Even now, less than two years after the president’s re-election, opposition to an extended federal role is, if anything, even stronger. Less than one in five Americans trust the federal government, and barely two in five see it as even capable of reversing the inequality. There may be a groundswell of support for the social democratic goals of the Great Depression’s New Deal, but likely not for the reimposing of its highly centralized policy prescriptions.

Energy and Economy

Pundits, such as the New York Times’ Paul Krugman, routinely describe Europe’s approach to economic, environmental and social policy as far more enlightened than that in the U.S. Wherever possible, progressives push European style in areas such as energy, with strong attempts to force a rapid conversion to “green” energy.

Yet, there’s not much to cheer for in Europe’s energy policy. The attempt to turn the Continent into a renewable-energy superpower has been hampered by soaring prices. The policy has increased dependence on unreliable and expensive renewable power – as well as Russian natural gas – forcing some European countries, including Germany, to boost their use of coal, certainly not much of a victory against climate change.

Ultimately, the consequences of high energy prices tend to fall, as they do here, on the middle and working classes, who see their electricity bills soar, along with the cost of gasoline. Some Europeans, in fact, may see their jobs threatened as employers look for lower-cost alternatives, including moving to energy-rich parts of the USA.

Addressing Inequality

In seeking out economic models that promote greater equality and upward mobility, many pundits look to Europe as a model. French economist Thomas Piketty’s influential book, “Capital in the Twenty-First Century,” argues that the only way to confront increasing income inequality and prevent deeper social fracturing is to expand the “social state” that forcibly redistributes wealth. In his mind, economic growth, traditionally a prime source of social uplift, is little more than a “illusory” solution.

Like many American progressives, Piketty looks to governmental action as the sole force for greater equality. Financed by taxes on wealth, the “social state” would curb the rich, but would also empower the bureaucracy and other parts of the rising clerisy with unprecedented power.

Yet recent European experience also provides little support for the benefits of redistribution, given the persistently high rates of unemployment across most of the EU. This is particularly true for much of the Continent’s youth, who are widely described as “the lost generation.”

Just as in the United States, pervasive inequality and limited social mobility have been well documented in larger European countries, including France, which has among the world’s most evolved welfare states. This is true even in historically egalitarian Sweden, where, over the past 15 years, the gap between the wealthy and other classes has increased four times more rapidly than in the United States. As Europe’s population ages, and its economies stagnate, demands for redistribution may well increase, but the ability to pay will surely decline.

Issue of Immigration

Concern over immigration has been a key driver in mounting anti-EU sentiment. Immigration has always been a more contentious issue for Europeans, who generally belong to a single ethnic group and prefer something closer to homogeneity than to the kind of rolling ethnic evolution that characterizes the United States. This nativism has been painfully evidenced in recent decades in from everything from the violent breakup of Yugoslavia and the far more civilized dismantling of Czechoslovakia to France’s recent campaign against the Roma, Catalonia’s attempts to divorce from Spain, and even the upcoming vote on Scottish independence from the United Kingdom.

During the boom times of the 1950s and ’60s, many European countries – France, Germany, Netherlands and the U.K. – invited hundreds of thousands of foreign workers, many from outside Europe. But with European labor markets far weaker, such an infusion seems to many middle- and working-class voters as a threat to their economic futures as well as to their identities.

Immigration played a role in UKIP’s victory in Britain’s voting for European Parliament.Diversity in London, by some counts home to the world’s largest concentration of immigrants, thrills London’s media and business communities but stirs resentment, particularly among more working- and middle-class voters. The fact that as many as 87 percent of new jobs generated in the recovery go to immigrants has not warmed their sentiments.

Future of the ‘nation-state’

As we look to how to reform our own less-than-perfect union, adopting the European approach seems, at best, misguided. One does not have to share the Tea Party’s reflexively hostile view of government to see that attempts to expand control from Washington could, in the long run, create the very stagnation and often-ugly political reactions that we see in Europe today.

More to the point, the drift toward an EU-like state works against the very structure of the American political community, designed to disperse power among various levels of government and varied constituencies. The tendency of administrations to rule through executive orders, or regulatory agencies, has been growing, particularly during the Obama years; a centralized state also could pose a threat to progressive Americans and their values under conservative rule.

For America, this may be the biggest takeaway from Europe’s crisis. Our political culture, for all its problems, was designed to allow localities greater leeway in determining their own fates. There are many areas – water, air quality, arterial road infrastructure – that require cooperation along regional lines, but, for the most part, the best approach, whenever possible, is to allow localities to control their fates. It is a decentralized, bottom-up system that, for the most part, has performed far better over time than the dysfunctional blunderbuss that is the European Union.

This article first appeared in the Orange County Register.

Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

Is Brazil Still the Country of the Future?

Fri, 06/20/2014 - 22:38

Not long ago, Brazil was riding high. It was feted as one of the “BRIC” nations destined to be the next world economic powers. The commodities boom had its natural resources and agricultural sectors humming. The press – for example, Monocle magazine’s swooning over Brazil’s push to boost its diplomatic presence – was adoring. And Rio was awarded the 2014 World Cup and the 2016 Olympics, two events that were intended to both serve as a catalyst for further development, and also as a coming out party of sorts for the country.

The World Cup is underway, but otherwise things haven’t quite worked out as Brazil thought they would. The average citizen of the country is upset at the vast sums being spent on international events that don’t benefit them. The last two years have featured riots, strikes, and various other expressions of unrest. Economic growth in the country has collapsed. In a special section last September, the Economist asked, “Has Brazil Blown It?

Late last month the McKinsey Global Institute issued a major report on the country called “Connecting Brazil to the World: A Path to Inclusive Growth.” At 104 pages, it’s massive, but a must read for anybody interested in South America’s giant.

And it’s a somewhat depressing read as well. Though there are immense strengths and opportunities for the future, Brazil has big problems too, most of them longstanding, and which hobble its aspirations.

Brazil is the 7th largest economy in the world and the 7th leading destination for foreign direct investment. But it’s 95th in per capita GDP, 114th in the quality of its infrastructure, and 124th in its level of ease in trading across borders. Its export sector is also heavily commodity dependent, particularly oil. Ranked only 43rd in global connectedness on McKinsey’s index, they estimate a potential boost of 1.25% (presumably percentage points) to annual GDP growth from improvements on that measure alone.

Three particular items jumped out at me from the study. One is the “custo Brasil” – the Brazil cost, so notorious it gets its own Wikipedia entry. A variety of factors from bureaucracy to the tax regime to an uncertain legal climate, poor infrastructure, crime, and corruption make the cost of doing business in Brazil very pricey indeed.

The second is the very low rate of investment in the economy. Brazil’s gross investment rate as a percentage of GDP is 18%, compared with 26% in Chile, 29% in Mexico, 40% in India, and 49% in China. Conversely, government consumption is at 22% in Brazil vs. 12% in Chile and Mexico, 13% in India, and 14% in China. Private consumption is similar in the countries except for China, which is notably lower. This probably helps explain the poor state of the infrastructure in the country.

The third is something I have personal experience with, namely protectionist trade barriers designed to create and sustain domestic industries in sectors like autos and computers. I suspect these rules were modeled on Japan, and more lately China, which used rules and business practices to build successful local champions. But in Brazil this has rendered its industry sclerotic. In effect, cars sold in Brazil have to be made in Brazil, ditto for computers, etc. This is where my personal experience comes in. When we were doing global PC procurement, Brazil was always a special case and our vendors had to have special Brazil made PCs for domestic use. This may not be an actual rule, but tariffs produce a de facto barrier. While this technique may have worked in Japan, it’s clear that it failed in Brazil. As the exception that proves the rule, McKinsey uses the example of regional jet manufacturer Embraer as a counterfactual. That company was privatized and opened to global competition. The result is that its got tough itself and is now an industrial champion for Brazil.

There are tons of statistics in the study that are worth scanning just to see. Brazil is consistently benchmarked against Chile and Mexico in Latin America, as well as fellow BRICs India and China. The comparisons aren’t pretty.

Reading a lot about the country in the last year, I put its problems into three categories: poor governance, geographic disadvantage, and scale disadvantage.

1. Poor Governance

Most of the issues pointed out by McKinsey fall squarely under the heading of poor governance. The contrast with nearby Chile could not be more plain across every dimension: corruption, the rule of law, investment, public sector debt, tax burden, infrastructure, regulation, etc.

Latin America seems to prefer two sorts of governments these days. One is a right wing nationalist heir to the military juntas of the past, best exemplified by the Kirchner regime in Argentina. The other are left wing populist-nationalist movements like Venezuela that tend to feature a streak of anti-Americanism. Both of these have produced pitiful results.

Brazil is a sort of lite version of the latter. Lula da Silva was a charismatic labor activist who led strikes and was jailed by the previous military dictatorship in his youth. Post-democratization, he went into politics. After moderating some of his more radical views, he was elected president on a reform agenda. While he had some success and was arguably and improvement on his predecessors, he ultimately failed to deliver on material changes in governance. His hand picked successor Dilma Rousseff has not been as effective and is in an electoral struggle for another term.

In line with the nationalist streak of this governing type, one of Da Silva’s primary concerns was Brazil’s amour-propre. As one of the world’s largest countries, he found it self-evident that Brazil should be treated as a great power. He lobbied for Brazil to have a permanent seat on the UN Security Council. He and others responded in kind to any affront to the nation’s pride, such as requiring American and only American visitors to be finger printed after the US imposed a fingerprinting requirement on foreign visitors. He sought out diplomatic coups where ever he could find them, which included cozying up to unsavory characters like Mahmoud Ahmadinejad who thinks Israel should be destroyed and that Iran has no gays (presumably because he has them executed when he can find them).

Da Silva forgot that there’s more to being a great power than being a big country – you’ve got to earn it. And as a very popular politician he did not seize his moment of opportunity to truly grasp the nettle of reform.

Meanwhile nearby Chile is one of the Latin American governments that’s followed a different model. It’s been run by center-left governments more or less the entire time since the restoration of democracy, and they’ve delivered on a good governance model that has taken them to effectively developed country status. Chile is now even a member of the OECD. Chile is basically the Minnesota of Latin America, and the results demonstrate it. This should show Brazil the size of the prize if the get their act together.

2. Geographic Disadvantage

Brazil is simply a long way from major developed markets. This puts it at a geographic disadvantage versus many other countries. Current airplanes cannot make a non-stop flight from Brazil to East Asia, arguably the most important emerging part of the world. It’s even a long haul from the United States, with relatively few gateway cities vs. say major European capitals. Brazil is time-zone advantaged with the US, however. It also speaks Portuguese instead of Spanish, which imposes a linguistic handicap.

3. Scale Disadvantage

Brazil is a big country, geographically and in population. Size can be an advantage, but it also makes reform difficult as it’s hard to turn a battleship. Brazil’s population of 200 million is more than ten times that of Chile.

Brazil’s two principal cities, São Paulo and Rio de Janeiro, are also megacities. São Paulo in particular is huge, and at north of 20 million people (more than the entire country of Chile) is the 10th largest city in the world. I recently wrote that it’s unlikely the world’s emerging megacities will turn the corner in eliminating dysfunction. Their problems are just too huge and their national growth rate too low. Though I’d consider this more hypothesis than conclusion at this point, my rule of thumb is that a megacity can only achieve escape velocity from pervasive dysfunction if they are a major city in a country that is the world’s current rising economic (or historically imperial) power.

Brazil is not that country, and two mega cities will be a drag on growth. Although São Paulo is an important emerging global city – 23rd in the world in a forthcoming report I helped create – I’m told that both São Paulo and Rio are growing more slowly than secondary cities in the country. A previous McKinsey study threw cold water on the idea that megacities are an advantage, noting their under performance by saying:

It is a common misperception that megacities have been driving global growth for the past 15 years. In fact, most have not grown faster than their host economies, and MGI expects this trend to continue. Today’s 23 megacities—with populations of 10 million or more—will contribute about 10 percent of global growth to 2025, below their 14 percent share of global GDP.

In contrast, 577 middleweights—cities with populations of between 150,000 and 10 million, are seen contributing more than half of global growth to 2025, gaining share from today’s megacities.

So I’m not surprised that it’s Curitiba, not one of the megacities, that’s where the innovative BRT revolution was begun. If I were looking to invest in Brazil, I’d be looking at this next tier of cities. Nor is it surprising that Santiago, Chile (population 5.4 million) has had great success in modernizing given its more moderate size.

Plain and simple the degree of difficulty is higher in Brazil because of the size.

Brazil is also a very racially diverse country with a number of challenges resulting from its history of oppression. Brazil had more slaves than any other country in the world and was the last New World colony/nation to abolish it. If slave reparations are on the agenda in the United States, how much more so similar issues in Brazil? Again, contrast with Chile, which never had very many slaves and abolished slavery in 1818. With the exception of a relatively few indigenous peoples on reservations, Chileans largely perceive themselves as ethnically homogenous, though with some skin tone based status (moderately sized…historically racially homogenous…Minnesota?)

Which is to say that it’s tough to entirely fault Brazil for not living up to the example of Chile. Its degree of difficulty is much higher. And its geography hamstrings its global interaction.

Nevertheless, solving the governance challenges to address the real issues Brazil faces remains the top agenda item. McKinsey has laid out a number of good suggestions, the real question is whether or not Brazil’s socio-political system can produce the ability to implement them.

Aaron M. Renn is an independent writer on urban affairs and the founder of Telestrian, a data analysis and mapping tool. He writes at The Urbanophile, where this piece originally appeared.

Photo: Ponte estaiada Octavio Frias - Sao Paulo by Marcosleal

America's New Industrial Boomtowns

Thu, 06/19/2014 - 15:26

David Peebles works in a glass tower across from Houston’s Galleria mall, a cathedral of consumption, but his attention is focused on the city’s highly industrialized ship channel 30 miles away. “Houston is the Chicago of this era,” says Peebles, who runs the Texas office of Odebrecht, a $45 billion engineering firm based in Brazil. “In the sixties you had to go to Chicago, Cleveland and Detroit. Now Houston is the place for new industry.”

With upward of $35 billion of new refineries, chemical plants and factories planned through 2015 for Houston and the surrounding Gulf Coast, companies like Odebrecht, which runs chemical plants and is working on a new freeway in the area, have converged on the nation’s oil and gas capital. They are part of the reason why the Texas metropolis ranks first on our list of the best large cities for manufacturing.

Houston, with 255,000 manufacturing jobs, is not yet the country’s largest industrial center; it still lags behind the longtime leaders Los Angeles, with 360,000 manufacturing jobs, and Chicago, home to 314,000. But it is clearly on a stronger trajectory. Since 2008, Houston’s manufacturing workforce has expanded 5% while Los Angeles has lost 13% of its industrial jobs and Chicago’s factory workforce has shrunk 11%.

View the Best Cities for Manufacturing Jobs 2014 List

Why Manufacturing Matters

Whether America is on the path to a sustainable industrial expansion or is just seeing a weak bounce back has been widely debated, but the recent numbers are impressive. Since 2010 the U.S. has added 647,000 manufacturing jobs. New energy finds have led to the construction and expansion of pipelines and refineries, and has sparked foreign industrial investment reflecting electricity costs that are now well below those in Europe or East Asia. Besides Houston, also ranking high on our big cities list are two other energy towns, No. 5 Oklahoma City and No. 10 Ft. Worth, Texas. Our mid-sized cities list is led by Lafayette, La., with nearby Baton Rouge in 11th place.

Evangelists of the “information economy” may think that industrial jobs are passé, as epitomized by a recent Slate article that recommended that working-class people from places like Detroit should move to areas like Silicon Valley or Boston where they can make money cutting the hair and walking the dogs of high-tech magnates. But the notion that U.S. manufacturing is doomed, and that the jobs are of lower quality than those in high-tech centers, is largely bogus; even in Silicon Valley the majority of new projected jobs are expected to pay under $50,000 annually. In contrast manufacturers pay above-average wages, in some cases due to unionization, but in many others because of the increasing sophisticated skills required by today’s factories.

Although we will likely never see a boom in factory employment on the scale experienced in the last century, the demand for blue-collar skills is projected to increase in future years. Among all professions for non-college graduates, manufacturing skills are most in demand, according to a study by Express Employment Professionals. By 2020, according to BCG and the Bureau of Labor Statistics, the nation could face a shortfall of around 875,000 machinists, welders, industrial-machinery operators, and other highly skilled manufacturing professionals.

Southern Comfort

Our research suggests that much of this growth will be in metro areas in the South and the Great Plains that are known for friendly business climates. New industrial investment is tending to go to places that are largely non-union, and feature lower taxes and light regulation. Epitomizing this trend is the No. 2 city on our large metro area list, Nashville-Murfreesboro-Franklin, Tenn., where manufacturing employment is up 6% since 2008. Nashville has become a hotbed for foreign investment in manufacturing, with the expansion of the Nissan facilities in nearby Smyrna, as well as a host of suppliers.

This is occurring, in part, because some large companies are shifting production to America from China in response to rising Chinese wages as well as sometimes unpredictable business conditions there.

Investment inflows, both from overseas and domestic companies, have boosted other standout southern industrial hubs, as well as the smaller metro areas on our mid-sized city list, notably Mobile, Ala. (third place), with its expanding industrially oriented port, and No. 14 Charleston-North Charleston-Summerville, S.C., which has been a beneficiary of major new foreign investment as well as the expanded presence of U.S. aerospace giant Boeing. The South also is home to our No. 1 small manufacturing city, Florence-Muscle Shoals, Ala.

The Resurgence of the Rust Belt

The progress is not confined to the Sun Belt. The resurgence of the U.S. auto industry has revived the economy of Warren-Troy-Farmington Hills, Mich., also known as “automation alley.” The home to many parts suppliers, engineering and tech support for the car industry, this area has enjoyed an impressive 12.7 percent growth in manufacturing jobs since 2008, placing it third on our big cities list.

Detroit, the center of the auto industry, ranks a respectable 16th on our big city list, but the big improvements in the Rust Belt are occurring in mid-sized cities such as Lansing-East Lansing, Mich. (eighth), Grand Rapids (ninth) and Ft. Wayne, Ind. (10th).

But arguably the strongest Rust Belt recovery has occurred in Elkhart-Goshen, Ind., third on our small cities list. Since 2008 Elkhart’s industrial employment — much of it in the recreational vehicle industry — has expanded 30%, one of the most dramatic employment turnarounds of any place in America. Unemployment has fallen to 5% from a recession high of 20.2%.



Western Exposure

The South and the Great Lakes may be America’s industrial heartland, but there are several strong pockets in the West. One region that is doing particularly well is the Pacific Northwest, led by Seattle-Bellevue-Everett, which has experienced 11% manufacturing employment growth since 2010.

Boeing is key here, but the Pacific Northwest’s industrial expansion has also been fueled by low electricity rates, largely due to the area’s strength in hydroelectricity. Portland-Vancouver-Hillsboro OR-WA (11th) is usually associated more with hipsters, but manufacturing growth has taken off, particularly with the expansion of Intel’s large semiconductor facility in suburban Hillsboro.

Another Western industrial hotspot is Utah, a state with low energy costs and business friendly regulation. Salt Lake City, 12th on our large metro area list, has enjoyed a 5.7% increase in industrial jobs since 2010. Growth has been even stronger in two other Utah cities, Provo -Orem and Ogden-Clearfield, which rank fifth and seventh, respectively, on our mid-sized cities list.

One surprising place where manufacturing is making a mild comeback is in the Bay Area, which for years has exported high-tech manufacturing jobs to places like Utah as well as the rest of the world. Despite ultra-expensive electricity, high labor costs and some of the world’s most demanding environmental laws, San Jose (13th on our big metros list) San Francisco-San Mateo-Redwood (15th) have posted solid industrial growth after years of decline. Yet both remain below their 2008 levels, and may find new growth difficult once the current tech bubble collapses.

Laggards

Two of the worst performers on this list are the big metro areas that have for decades been the country’s largest industrial hubs, Los Angeles-Long Beach-Glendale (55th) and Chicago-Joliet-Naperville (56th). It appears they lack the cost competitiveness and specialized focus of America’s ascendant industrial regions.

Another clear loser is the Northeast, which accounts for seven of the eight lowest ranked big metro areas. Since 2008, Philadelphia (62nd) has lost 21% of its once-large industrial job base, while New York City, which has been losing industrial jobs for decades, ranks 45th. Here, too, high costs and regulation are a factor, as well as the loss of industrial know-how resulting from long-term erosion of their manufacturing bases.

Of course, some information age enthusiasts may argue that losing such jobs is something of a badge of honor, since “smart” regions do not focus on the gritty business of making things. Yet if you look across the country, you can see that many of the strongest local economies, from Houston and Nashville to Seattle, have taken part in the U.S. industrial resurgence. It seems this is one party more worth joining than avoiding.

View the Best Cities for Manufacturing Jobs 2014 List

This article first appeared at Forbes.com.

Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

Houston skyline photo by Bigstock.

Composite Traffic Congestion Index Shows Richmond Best

Wed, 06/18/2014 - 22:38

It is important that traffic congestion be controlled sufficiently to facilitate a more competitive metropolitan economy. Each year, three organizations produce traffic congestion reports, Tom Tom, INRIX and the Texas Transportation Institute of Texas A&M University (TTI). These reports use  different methods to estimate the excess time lost in traffic congestion during peak travel periods (morning and evening week day "rush hours").   

The excess travel time is estimated relative to the travel time that would be expected if there were no congestion (if all traffic were free flowing). Economists caution that achieving free flow conditions at all times would require excessive investment. Yet, the standard metric used by the three indexes are useful for comparing the intensity of traffic congestion between metropolitan areas even without knowing the level at which economic efficiency is optimized.

There is generally strong correlation between the three indexes, though there are important differences. For example, the TTI report uses data from INRIX, yet agrees with INRIX on only six of the most congested 11 US major metropolitan areas (over 1 million population). The most substantial difference is in San Francisco, which INRIX (and Tom Tom) ranked as the second most congested major metropolitan area, far worse than the TTI ranking of 20th.

The findings from the three traffic congestion indexes are synthesized into a composite congestion index in this article. Because the TTI's latest index is 2011, composite index covers 2011 through 2013 (for methodology, see Note 1).

Worst Traffic Congestion in 2011-2013

The "10 worst traffic congestion" list includes some of the largest metropolitan areas, those with the highest urban population densities and a few smaller metropolitan areas with special traffic congestion inducing conditions (Figure 1).

Los Angeles has the worst traffic congestion in each of the three indexes (44.4% excess travel time). This is consistent with the now 30 year history of TTI, which has typically shown Los Angeles to have the worst traffic congestion. This is not surprising, since Los Angeles is the densest urban area in the nation, ahead of second place San Francisco by 10 percent and New York by 30 percent. Traffic congestion has been made worse by cancellation of planned freeways and freeway segments in the Los Angeles area, such as the Beverly Hills Freeway, the Slauson Freeway, the Reseda Freeway, the La Cienega Route 170 freeway, the South Pasadena "missing link" and others (Note 2).

Austin ranked second in traffic congestion (34.5%). This may be surprising, since Austin is not among the largest major metropolitan areas, though it is among the fastest growing. In the middle 1950s, when the final plans for the interstate freeway system were completed, Austin was much smaller and only a single interstate route was justified. Later, opposition to freeway development led to increased congestion. In more recent years the Austin freeway system has been augmented by new toll roads, though roadway improvements have not been sufficient to deal with the rapidly rising demand.

Not surprisingly, San Francisco (34.4%), with the second highest urban density among major metropolitan areas, ranked third in traffic congestion. New York (33.4%), with its higher than average density and dense core area ranked fourth in traffic congestion. Seattle ranked fifth (32.4%), despite its somewhat lower urban density. Seattle's long and relatively narrow north-south urban form and modest north-south freeway capacity is an important contributor to its intense traffic congestion. As in the case of Los Angeles, some planned freeways were canceled, which has also exacerbated traffic congestion.

San Jose is a smaller major metropolitan area, yet has the sixth worst traffic congestion in the nation (32.2%). There are two principal contributing factors, its proximity to much larger San Francisco and the third highest urban density of the major metropolitan areas, 10 percent above New York.

Washington (31.3%) and Boston (29.7%) have the seventh and eighth worst traffic congestion respectively. In each case, core areas have little freeway capacity (in part because of freeway cancellations in both cities).

Houston, which had the worst traffic congestion the nation during the middle 1980s, now ranks much better, at ninth (28.3%). Houston's improvement has occurred because of the roadway expansions opened concurrent with some of the fastest population growth in the high income world over the past three decades.

Portland, like San Jose and Austin is not among the larger major metropolitan areas. Yet Portland ranked 10th in traffic congestion (28.2%). Portland's policies, such as densification, have contributed to this; these include a cancelled freeway and a preference for light rail over highway capacity expansion. According to the TTI index, Portland has seen its peak period congestion ranking rise from 47th worst (out of 100) in the middle 1980s to 6th worst in 2011.

Least Traffic Congestion in 2011-2013

The major metropolitan areas with lower levels of congestion tend generally to be smaller and to have lower urban population densities (Figure 2).

Richmond is the least congested major metropolitan area in the nation (8.7%), and has experienced growth since 2000 that is greater than average. Kansas City had the second least traffic congestion (10.9%), while nearly stagnant growth Rochester (11.5%) and Cleveland (12.9%) ranked third and fourth. Faster growing Salt Lake City ranked fifth (13.3%). Population losing Buffalo ranked sixth (13.5%) edged out seventh ranked and slow growing St. Louis (13.5%). Faster growing Oklahoma City ranked eighth (13.7%), while slower growing Memphis ranked ninth (14.1%). Indianapolis (14.4%), one of the few Midwestern metropolitan areas growing faster than average, has the 10th lowest traffic congestion level.

Traffic Congestion and Density

The connection between higher levels of traffic congestion and higher urban population densities has been documented in various analyses (also here). The traffic congestion index confirms that metropolitan areas with higher urban densities generally have more intense traffic congestion (Figure 3). Obviously, there are other factors that contribute to traffic congestion, not least the insufficient provision of highway capacity. This is evidenced by growing Dallas-Fort Worth and Phoenix, where state and local officials have provided substantial increases in highway capacity. Traffic congestion index shows Dallas-Fort Worth to have only the 16th worst traffic congestion and Phoenix to have the 33rd worst traffic congestion (out of the 52 major metropolitan areas). Greater employment dispersion can also be an important factor. The data for each of the major metropolitan areas is in the Table.



Composite Traffic Congestion Index: 2011-2013 Excess Travel Time: Peak Periods Rank Metropolitan Areas Index 1 Los Angeles 44.4 2 Austin 34.5 3 San Francisco 34.4 4 New York 33.4 5 Seattle 32.4 6 San Jose 32.2 7 Washington 31.3 8 Boston 29.7 9 Houston 28.3 10 Portland 28.2 11 Miami 27.8 12 Chicago 26.9 13 Philadelphia 25.8 14 Atlanta 25.7 15 Denver 25.3 16 Dallas-Fort Worth 23.7 17 San Diego 23.3 18 Baltimore 23.1 19 Nashville 22.9 20 Minneapolis & St. Paul 22.7 21 Tampa-St. Petersburg 22.6 22 Charlotte 20.9 23 New Orleans 20.5 24 Orlando 20.3 24 Virginia Beach 20.3 24 Riverside-San Bernardino 20.3 27 Pittsburgh 20.2 28 Sacramento 19.4 29 San Antonio 19.0 30 Hartford 18.7 31 Cincinnati 17.9 32 Las Vegas 17.7 33 Phoenix 17.2 33 Detroit 17.2 35 Providence 17.1 36 Columbus 16.8 37 Milwaukee 16.3 38 Jacksonville 15.7 39 Birmingham 15.2 40 Raleigh 14.9 41 Louisville 14.6 42 Indianapolis 14.4 43 Memphis 14.1 44 Oklahoma City 13.7 45 St. Louis 13.5 45 Buffalo 13.5 47 Salt Lake City 13.3 48 Cleveland 12.9 49 Rochester 11.5 50 Kansas City 10.9 51 Richmond 8.7 Derived from Tom Tom, INRIX and Texas Transportation Institute data

 

Traffic Congestion and Economic Growth

While there are different interpretations of the appropriate standard for traffic congestion, there is no question but that less traffic congestion benefits a metropolitan area's competitiveness. Because traffic congestion increases travel times, it necessarily reduces the share of a metropolitan area's (labor market) jobs that can be reached by the average employee. A considerable body of research associates greater access (measured in time) with improved economic performance and job creation.

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Note 1: The 2011 – 2013 index represents the average excess travel time estimate of the three sources. For each source, each metropolitan area's excess travel time is converted to a percentage of the metropolitan area with the worst excess travel time. These percentages are then averaged and the final excess travel time estimate is calculated by applying this percentage to the average worst excess travel time for the three sources. But these estimates are based on the TTI travel time index, and the peak hour excess travel time percentages from INRIX and Tom Tom (the Tom Tom figure is obtained by averaging data from the morning and evening peak period).

Note 2: I have a personal attachment to the Long Beach Freeway "missing link" in South Pasadena. In the early 1960s my great aunt and her husband were forced to sell their home taken to the California Highway Department for the imminent construction of the roadway. This was the beginning of a decades-long fight to keep the freeway from splitting the city of South Pasadena. In the early 1980s, as a member of the Los Angeles County Transportation Commission I was appointed to a special committee chaired by County Supervisor Peter F. Schabarum to make a final route selection between the Caltrans "Meridian" route and the South Pasadena preferred "Westerly Route." Our decision, the result of submittals and hearings, confirmed the Caltrans route, but did nothing to alleviate the South Pasadena opposition. Now, there is the possibility of building a tunnel, which would minimize surface disruption.

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Wendell Cox is 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 was appointed to the Amtrak Reform Council to fill the unexpired term of Governor Christine Todd Whitman and has served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Photo: Richmond (major metropolitan area with the least traffic congestion) by CoredestayChiKai

Let’s Make Kalamazoo’s Promise America’s Promise

Tue, 06/17/2014 - 22:38

In 2005, in order to boost their city’s economy, a small group of donors in the city Glenn Miller made famous created the Kalamazoo Promise. It  offered any graduate of the city’s public schools a four-year scholarship covering all tuition and mandatory fees at any of Michigan’s public colleges or universities, provided those students maintained a 2.0 grade average in college and made regular progress toward a degree.

The offer had an immediate and noticeable effect on public school enrollments and home construction within the city as families moved back in to take advantage of the chance to boost their children’s higher education opportunity. Enrollments in the public schools rose initially by 17.6% even as high school dropout rates fell by half. Residential construction permits within the district rose from 30% within the overall metropolitan area to 50%.  The program’s success caused other cities across the country as disparate as El Dorado, Arkansas and Tulsa, Oklahoma to adopt similar programs.

Now a recent national study of the results of such initiative has documented the positive impact such promise programs can have on increasing educational attainment, while encouraging more students to attend a wide range of colleges.  University of Pittsburgh professors, LeGower and Walsh found that programs offering scholarships to all students regardless of merit, and to the widest range of two and four year colleges and universities, saw the biggest gains in enrollment. Their research published in a National Bureau of Economic Research working paper, documented enrollment gains in Kalamazoo and other identical programs.

With these compelling results in hand, it’s time to make Kalamazoo’s promise America’s promise. A bi-partisan proposal from the non-profit Redeeming America’s Promise seeks to do just that by creating a federal American Promise Scholarship program that would pay the cost of tuition for every academically capable and personally determined high school student in America from families earning $180,000 or less. The plan would offer two year scholarships for high school graduates of $2500 per year, and four year scholarships worth on average $8500 per year to students graduating with a 2.75 GPA. These rates represent the current average cost of in state resident tuition at our public community colleges and universities. States would need to agree to accept such scholarships in lieu of any tuition payments from the families of APS students and at a minimum maintain their current level of support for their institutions. Additional incentives would be provided to encourage them to do even more to make sure a college education is both accessible and affordable for their residents. According to the Bipartisan Policy Center, there is $52 billion in current expenditures which can be used to fund the American Promise Scholarships by redirecting the money the federal government currently spends on tuition tax credits as well as by integrating the Pell Grant program into this new form of support.

Other parts of the plan, which can be downloaded in its entirety at redeemingamericaspromise.org, would provide additional support for students who are the first in their family to attend college and reward college completion as well as post-graduation service to community or country. Money for these programs can be found by reducing the level of profits the government currently makes on student loans and ending other college support programs which have not proven their effectiveness.  

The current system of financing higher education is unsustainable.  Student loan debt, which is not dischargeable in bankruptcy, now exceeds one trillion dollars—more than all the credit card debt in the country. The burden is felt disproportionately by lower and middle income families and is a severe drag on the desire of members of the Millennial Generation (born 1982-2003) to start a family, buy a house and have children. Furthermore, there is no historical precedent for placing such a burden on our youngest citizens.

Since the country’s founding, education has been a key component of the promise of upward economic mobility. This has been true in every era, beginning with the Northwest Ordinance setting aside land for one room schoolhouses to the institution of mandatory, free primary education in all states at the time of the Civil War. The expansion of educational opportunities continued in the 20th Century as our growing Industrial Age economy required workers with a high school education for our factories and offices. Government funds in every state and community were set aside to provide a free, public high school education for boys and girls to respond to these new demands. Later in the century, after WWII, the GI Bill of Rights and then the Higher Education Act 0f 1965 were enacted to further encourage college enrollment, thereby establishing the educational foundation for our rapidly expanding middle class. It is only in this century that we have asked a generation, Millennials, to self-finance the education they need, and our country needs, to be economically successful.

This wrong-headed inter-generational and economically disastrous policy needs to end before America loses its global competitive edge for good. The current system is creating a skills gap.

America needs to make Kalamazoo’s Promise a promise every American can count on and that can address the growing skills gap in many parts of the occupational spectrum.  By joining with the Democrats and Republicans, young and old, who are already supporting Redeeming America’s Promise’s plan to make college tuition free we can ensure that day arrives sooner rather than later.

Morley Winograd is co-author of the newly published Millennial Momentum: How a New Generation is Remaking America and Millennial Makeover: MySpace, YouTube, and the Future of American Politics and fellow of NDN and the New Policy Institute.

Graduation photo by Bigstock.

The Ugly City Beautiful: A Policy Analysis

Tue, 06/17/2014 - 07:08

When it comes to the future, Detroit and San Francisco act as poles in the continuum of American consciousness. Detroit is dead and will continue dying. San Francisco is the region sipping heartily from the fountain of youth. Such trajectories, according to experts, will go on indefinitely.

Harvard economist Ed Glaeser has a grim outlook for the Rust Belt. “[P]eople and firms are leaving Buffalo for the Sunbelt because the Sunbelt is a warmer, more pleasant, and more productive area to live,” he writes in City Journal.

Glaeser echoes this sentiment in a recent interview with International Business Times, saying “[s]mart people want to be around other smart people”, and the Rust Belt has a long slog ahead given that “post-industrial city migration is dominated by people moving to warmer climes”.

But is this true? Is there a “brain drain” from the Rust Belt to the Sun Belt and Coasts? In a word: no. But Rust Belt leaders have bought this narrative hook line and sinker, and the subsequent hand-wringing has led to wasteful public investment.

“Michigan’s cities must retain and attract more people, including young knowledge workers, to its cities by making them attractive, vibrant, and diverse places,” reads a 2003 memo from the National Governor’s Association about Michigan’s “Cool Cities” campaign.

But the campaign struggled. “Government can’t mandate cool,” reflected Karen Gagnon, the former Cool Cities director. “As soon as government says something is cool, it’s not.”

What’s worse, “cooling you city” with talent attraction expenditures can exacerbate economic disparities on the ground. Cities, like Chicago, are increasingly becoming bifurcated cities based on faulty assumptions that “trickle down urbanism” works. That said, the challenge of the day—for not only Rust Belt cities, but all cities—is not “brain drain”, but “brain waste”. Those cities who can best rebuild middle class communities tied to emerging markets will be the future of investment, like they were in the past.

Through Rust-Colored Glasses

When a people fall from grace, the sentiment of decline tends to stick. The Rust Belt’s demise is cemented. Meanwhile, the future is elsewhere. Like toward the sun. For instance, from 2000 to 2010, the Sun Belt metros of Houston, Dallas, Atlanta, Riverside, Las Vegas, Miami, Orlando, and Phoenix experienced the largest population growth. The biggest losers? It’s a “who’s who” of Rust Belt metros, led by Detroit, Cleveland, Pittsburgh, and Buffalo.

America is a country governed by growth: big cars, big belt buckles, big houses, and big populations. Shrinkage is weakness. It is a sign of place failure. The problem here is that population growth is an ineffective, broad-brush measure when trying to understand regional underlying dynamics. A new study by Jessie Poon and Wei Yin in the journal Geography Compass called “Human Capital: A Comparison of Rustbelt and Sunbelt Cities” details exactly that.

In it, the authors compare human capital levels between the Sunbelt metros in California (including San Francisco and L.A.), Nevada, New Mexico, and Arizona with Rust Belt metros in Michigan, Ohio, Indiana, Pennsylvania, and upstate New York. When it comes to share of population with a college degree, the authors find that the Rust Belt is experiencing a brain gain equal to their Sun Belt peers from 1980 to 2010. Poon and Wei also found that skill ratios of immigrants is higher in the Rust Belt than Sunbelt. The authors note that despite population decline, the Rust Belt continues “to be important sites of human capital accumulation”.

The study coincides with recent work out of the Center for Population Dynamics that shows Greater Cleveland’s number of 25- to 34-year olds with a bachelor’s or higher increased by 23% from 2006 to 2012, as well as Pittsburgh economist Chris Briem’s work that shows the metros of Pittsburgh, Detroit, and Cleveland rank 1st,, 6th, 7th in the country respectively when it comes to the number of young adults in the labor force with a graduate or professional degree.

Beyond human capital, the Rust Belt continues to produce and export wealth at a massive pace. The “Chi-Pitts” mega-region, which mirrors the Rust Belt boundaries with the addition of Minneapolis, generates $2.3 billion in economic output, second only to the “Bos-Wash” mega-region that makes up the Northeast Corridor.

Also, using IRS migration data from the 2009-2010 period, a team of researchers led by Michal Migurski showed that Los Angeles County, New York County, and Cook County sent the most people and money to the rest of the United States. Detroit’s Wayne County was fourth. Cleveland’s Cuyahoga County was 9th, one spot ahead of San Francisco County. Speaking to Esquire, which published the work in a visual called “Where Does the Money Go”, Migurski explains the findings:

"We realized that if you look at the biggest 'losers,' essentially what you're looking at are the biggest cities in the U.S.," Migurski says. One of those losers: New York County, which lost $1,306,548,000 and 15,100 people. "But does that actually mean New York is a big loser?" Migurski asks. "One of our ideas was that, you're not a loser if you're losing money. You're an exporter." The sort of exporter, he says, that boosts the rest of the U.S. economy. Traditional Sun Belt retirement areas comprise the gainers; areas like South Florida and Southern California in particular, create what Migurski calls "money sinks."

Still, the notion of “loser” for Wayne and Cuyahoga County sticks, despite evidence to the contrary. But why? Why the constant “poor post-industrial people” sentiment, if not a low-grade captivation that comes with “ruin porn” rubbernecking?

Well, if an ideal exists—you know, the experts beckon: be the “new” city, the “hot” city, the “creative” city—then a study in contrasts is necessary. The Rust Belt, with its connotations of smoke stacks and demographic decline, fits the bill.

“[Richard] Florida suggests that Rustbelt cities’ high concentration of less creative blue-collar workers also produces unhappy residents,”Poon and Wei conclude in their Rust Belt/Sun Belt study. “We suggest that such a doom and gloom picture of urban and regional development for the uncool industrial Rustbelt needs to be tempered with a trend of brain gain that is growing across cities in the region.”

But for this tempering to happen a clearer understanding of the importance of accumulating human capital needs to be ascertained. More exactly: Is it to put your city to work, or to “live-work-play”?

Build it and they will…what?

In his 1921 work Economy and Society, social scientist Max Weber details a city’s raison d'etre. Cities can be producer cities, wherein importance is derived from industries that demand national and international trade. Think Detroit and cars. Additionally, cities are consumer cities, in which growth is tied to how much is spent consuming goods and services in the local economy. Think eating, drinking, and buying houses.

The cities that are the most economically robust have wealth generated from global production, which in turn enables local consumption. San Francisco’s tech economy drives it real estate market and artisanal toast scene. That is, if the question was “What came first, the farm-to-table chicken or the egghead?” The answer is “the egghead”, hands down.

But this logic—i.e., in order to go to a restaurant, you need a job, and your job prospects are tied to the viability of your region’s global industries—is often turned on its head in economic development. Here, the goal is growth, no matter the rhyme or reason.

“Like in many Sun Belt cities,” writes a Seattle Times columnist and Sun Belt expat, “Phoenix’s economic plan devolved into merely adding people, no matter the enormous long-term costs”. The columnist goes on to note that while the population has boomed, the city lags on most measures, such as per capita income (see Figure 1 below).

Moreover, the Phoenixes of the world exist partly because of retired Baby Boomers and the disposable income that comes with it. The Sun Belt feeds off the legacy of production in the Northeast and Midwest. Other cities, like Portland, are fed by a not dissimilar dynamic. But it’s not the retired who come, rather the pre-retired.

“The Portland metro area's young college-educated white men are slackers when it comes to logging hours on the job,” lead’s a piece in the Oregonian about a study conducted last year, “and that's one reason people here collectively earn $2.8 billion less a year than the national average.” Figure 1 demonstrates Portland’s sluggish income gains compared to Rust Belt peers Pittsburgh and Cleveland.

Similarly, in a paper circulated by the Federal Reserve Bank of Atlanta, the author analyzed the top 86 “brain gain” metros in the nation to determine whether or not a region’s increase in human capital was paying off in terms of per capita income, labor force participation, poverty rate, and unemployment. The author found Portland was one of twelve metros that experienced zero economic outcomes. Pittsburgh scored 4 for 4. The authors suggest that talent attraction and retention—when untethered to production capacity—“may be largely inefficient, a kind of traditional economic development ‘buffalo hunting’”.

Portland is perhaps America’s consummate lifestyle city. No doubt, the city has experienced a significant brain gain over the last decade. Portland is a talent attraction model. But it is not a talent producing or refining model. Rather, Portland is producing a scene that is run by the consumption of the scene’s aesthetic. Writes one young worker who left:

“I can’t stay too long because I know if I stayed a day too long in Portland, I’d suddenly be happy to embrace the slow pace of the city and stop working... I’d end up getting sleeping real late every day, drink some coffee, maybe write some poetry on my porch (or not), and then find a part time job selling cigars like I had in college.”

The lesson is that accumulating talent is not enough. There has to be something for the talent to do, or a context that fosters “doing”. It is also a warning for cities investing in the lifestyle game. Spending on creative class amenities ensures nothing. Creating a field of dreams won’t pay the bills. But it will run up the tab.

The Ugly City Beautiful

In 1998, the Chicago Sun-Times ran a piece called “Building the City Beautiful”. “The mayor of the city of Chicago, Richard M. Daley, is a big admirer of Martha Stewart,” it begins, before describing Daley’s plans to begin the "Martha Stewart-izing" of Chicago. The article goes on to quote a University of Illinois at Chicago professor who said Chicago is turning from a producer city to a consumer city. "The producer city was the industrial city -- the smoke and the noise and the industrial jobs,” noted the professor. “The consumer city is the city of Starbucks, boutiques and so forth.”

The professor was only partly right. By the 1990s, Chicago was indeed becoming brainier. But its emerging knowledge economy was an outgrowth of its “big shouldered” manufacturing base. Columbia University professor Saskia Sassen recently noted that pundits overlook this when examining the city’s transformation, with the bias being that “Chicago had to overcome its agro-industrial past, [and] that its economic history put it at a disadvantage”. Notes Sassen:

[I]n my research I found that its past was not a disadvantage. In fact, it was one key source of its competitive advantage. The particular specialized corporate services that had to be developed to handle the needs of its agro-industrial regional economy gave Chicago a key component of its current specialized advantage in the global economy.

Similar economic transformations from legacy cost to legacy asset are found throughout the whole of the Rust Belt. Pittsburgh, for instance, no longer provides the muscle for steel making, but it does act as the “brain center” for the world’s steel frame. How this came about is detailed in the article “Pittsburgh's evolving steel legacy and the steel technology cluster”.

With the arrival of the new economy also came “new economy” tastes. Sassen noted that when she arrived in to study in Chicago in the 90s she was greeted by “old lofts transformed into beautiful restaurants catering to a whole new type of high-income worker—hip, excited, alive.”

In other words, local consumption patterns began setting up around the emergent worker demand. Going was the Italian Beef and arriving was pickled beets. This demand also impacted housing, with the attraction to urban living setting the stage for gentrification. This, in a nutshell, is the dynamic driving the transformation of urban neighborhoods nationwide: a new economy demands new workers which in turn demand a new kind of lifestyle. The problem, though, is that leaders have the causality backward, or that creating a new lifestyle will incur new worker supply and then poof: new industries. But as we see with Portland, it is not that easy. The industrial DNA and social history of your city matters more than the cosmetics atop the topography.

Still, from a policy and strategy standpoint, it is easier just to make your city “cool”. And that’s exactly what Chicago has been doing at a significant pace. In a recent piece entitled “Well-healed in the Windy City”, author Aaron Renn details Mayor Rahm Emanuel’s policy of using tax-increment financing (TIF) to create geographic “winners” and “losers” across Chicagoland. “The true purpose of Chicago’s TIF districts—which now take in about $500 million per year,” writes Renn, “appears to be tending to high-end residents, businesses, and tourists, while insulating them from the poorer segments of the city.”

The strategy was spelled out explicitly by Mayor Emanuel during a recent ribbon cutting for a bike path in Chicago’s Loop. Said Emanuel: “I expect not only to take all of their [Seattle and Portland's] bikers but I also want all the jobs that come with this, all the economic growth that comes with this, all the opportunities of the future that come with this.”

Notwithstanding the faulty logic in the strategy—e.g., if Portland lacks the jobs for its residents, how can it supply jobs for Chicagoans—the real problem is the costs associated with such bifurcated investment. In West and South Chicago, the byproducts of the City Beautiful approach are downright ugly. But they are not unexpected. They are the long-documented economic and social effects of concentrated poverty and segregation. Continues Renn:

Safety levels in Chicago can no longer be plotted on a single bell-shaped curve for the entire city. Today, that curve is split into two—one distribution for the wealthy neighborhoods and one for the poor ones. A lack of resources is part of the problem: the police department is understaffed… While the city budget is tight, failing to increase police strength during a murder epidemic is a profound statement of civic priorities.

Urban priorities flow from a perception of what is at stake. For long, the push for human capital accumulation has pitted city versus city amidst the backdrop of an urban popularity contest in which the “winner” is assured nothing outside of popularity. But victory in the vanity game is fleeting. The young and the restless are exactly that, and many people who come to New York or San Francisco, or for that matter Portland, leave as they get older and seek out affordable places to raise a family. What remains on the ground is the reality of brain waste. Without the prioritization of equitable, integrated middle-class neighborhoods a city’s progress will be always be disparate, if not illusory. Talent attraction is but part of a redevelopment process. So is talent refinement for those arriving and talent production for those in place. After all, neighborhoods are factories of human capital. Building people, not places, is what a successful city is all about.

But to know this is to “know thyself”. The Rust Belt has been dying for some time now, so say the experts. The region has absorbed the projections, and given that desperate times call for desperate measures investment has been wasted. “[Creative class theory] is bad because it distracts from what's important,” says Sean Stafford, author of Why the Garden Club Couldn’t Save Youngstown.

Regaining focus entails removing the rust-colored glasses. Rust Belt leaders will see there are assets to work with, not to mention feel the freedom that comes with no longer being a study in contrast for those touting a future that really isn’t.

Richey Piiparinen is Senior Research Associate at the Center for Population Dynamics at the Maxine Goodman Levin College of Urban Affairs at Cleveland State University. The Center for Population Dynamics at Cleveland State University’s Maxine Goodman Levin College of Urban Affairs aims to help partner organizations competitively position the region for economic and community development. It will do so through the lens of migration, applied demography, and culture.

Lead photo courtesy of bctz Cleveland

California's Choice - Growth or Decline

Sun, 06/15/2014 - 22:38

I’ve been friends with Charlie Sena for almost two decades. Charlie, a longtime entrepreneur, Democratic political operative and fundraiser for former Gov. Gray Davis, recently chided me about what he sees as my “negativity” about California and its future. My response was that, given its natural advantages, this region should not be in such a weakened condition. Decline, I suggest, is not an imperative here, but largely a choice.

Last week, I decided to confront this issue over lunch at Citrus Grille in Orange, just down the block from Chapman University, where I teach. Charlie noted that the negative points I was making were correct, but I owed it to the readers to “write a piece on why California can be, and should be, a state with the right climate for business growth.”

So, we sat in the restaurant, working on a list of positive things for California to build on. We centered on working with our population, including many immigrants and entrepreneurs, reinforcing our connections to Asia and Mexico and, finally, taking advantage of our climate. “The great strength of California,” Charlie suggests, “is people – people who go out and make it on their own.”

Immigrant Edge

The first group Charlie pointed to are immigrants, a group for which California long has been a lure. Twenty percent of Californians are foreign-born, and one of four immigrants nationally lives in our state. Amidst a general downturn in overall entrepreneurial activities, notes a recent study, the foreign-born have continued to expand their business footprint. In 2011, notes the Kaufmann Foundation, immigrant start-up rates were twice those of the native-born.

Attitudes are important here. To succeed in a highly regulated, expensive state like California, you need to have more than usual perseverance.

Asians, for example, according to the Pew Research Center, are far more likely than other Americans to believe that “hard work” pays off. Not surprisingly, they also tend to have higher levels of education, income and business success than other Americans.

But equally important has been the entrepreneurial growth among Latinos, who became the state’s largest ethnic group in 2014, according to demographers, and could be close to 50 percent of the population by 2050. Indeed, a recent study of Latino business found that Hispanic entrepreneurs have more than tripled since 1990, from 577,000 to more than 2 million. Not only did this growth outpace that of the overall population increase among Hispanics, but at a rate of increase far above the national average.

Anyone who drives out into the vast expanses of the state can see these businesses – new markets, countless restaurants, small factories, farms, local banks and scores of smaller service firms. California’s new commercial signature is not the traditional mall or luxury shopping street, but, rather, multiethnic commercial areas, like the Diamond Jamboree center in Irvine.

Rise of Self-employed

But there’s also signs of greater growth in the ranks of self-employed people across the population. The self-employed proprietor is the one entrepreneurial category that has grown since the recession. This may well represent a pragmatic choice by business people who wish to make money, but avoid the ever-increasing regulations here that make having employees increasingly difficult.

This growth is particularly vibrant in the Riverside-San Bernardino area, notes a recent study by the economic modeling firm EMSI Inc. The inland region expanded its sole-proprietor ranks by 11.8 percent since 2008, second to booming Houston and more than twice the growth rate of either the Bay Area or Los Angeles-Long Beach. All these key California areas greatly outperformed such competitors as Denver, Greater Washington, D.C., Chicago or Atlanta.

Foreign connections

California also has enjoyed a unique connection to the fast-growing economies of the Pacific Rim and Mexico. Texas succeeded in luring Toyota, as Tennessee did with Nissan, but neither state possesses the intense cultural and historic ties California enjoys with Japan and other Pacific Rim countries. To be sure, places like Plano, outside Dallas, and around Houston’s Bellaire Road look increasingly like the San Gabriel Valley or Garden Grove in their ethnic flavor, but they are at least a generation – and an order magnitude – behind.

Where Texas eats our lunch, says Charlie, who lived in Houston years ago, is in forging ties with Mexico. Many Californians – particularly on the right but also on the “green” left – tend to regard Mexico as something of a threat to our social and ecological order. But supposedly less-enlightened Texas, where business is king, has developed a powerful passion for closer ties to Mexico, with a growing partnership between the Lone Star State and Mexico, which, for example, is already Houston’s foremost trading partner.

Political dilemma

So, why is California not taking advantage of these assets? One main reason lies with the regulatory and tax agendas of Charlie’s own party, something he is quick to acknowledge. “The Democratic Party,” he suggests, “is on a collision course with reality. They don’t realize that you need a broadly growing economy to support or expand social services.”

This is the dilemma that progressives need to confront in California. An over-regulated, overtaxed economy slows business growth and forces companies to look elsewhere to expand, particularly outside of very high-end functions. Superhigh income tax rates deprive small-business owners of the capital they need to reinvest and grow their enterprises. Under the current regime, many of them, particularly the young, may find starting a business in Colorado, Nevada, Utah or Texas easier and more financially rewarding.

Back to Pat?

Like Charlie, I admire many of the things we created during the great expansion of the Gov. Pat Brown era, a half-century ago – the higher education system, the freeways, the water projects, to name three. All these were paid for by broad-based economic growth, and contributed to accelerating that growth over time. Our success made California a model for other states – including Texas and North Carolina – which wanted to leave behind their feudal, and deeply racist, pasts.

Now, these people are essentially beating us at our own game, and unless we respond, they will continue to attract not only large businesses, such as Toyota and Occidental, but also talented people critical to the grass-roots economy.

Politicians in Sacramento, and many city halls across this state, seem to have little notion of, or even interest in, economic growth beyond serving the interests of public employees and crony capitalists, whether in subsidized “green energy” boondoggles or among rent-seeking developers. These kind of policies are simply transfers of resources from neighborhoods, suburban or urban, to the well-placed; they have not been significant economic drivers.

Charlie’s last point – climate – remains critical. This region is never going to become Detroit, no matter how misguided is our political class, simply because of its weather and topography. People and businesses will want to come here if they can make a decent living and enjoy the option of housing, largely single-family homes, that remains the ultimate goal of most upwardly mobile people, particularly immigrants.

So, if maybe sometimes I get too negative about California, it’s in large part because we squander opportunities and seem determined to ignore all the basic economic data. In this shortcoming, the media, notably the Los Angeles Times, has been particularly gratuitous, acting as if the loss of key companies, such as Occidental and Toyota, was largely irrelevant and, indeed, inevitable.

This is not, in my mind, the California I moved to four decades ago. That we do things differently here is not a negative – it’s why many of us are here – but we need to recognize that you cannot support an ever-expanding welfare state or do much of anything about climate change simply by chasing people and individuals elsewhere. We need to start developing policies that exploit our advantages and not rest on our glorious past. We need to see, as Charlie would say, that decline is not inevitable, but only a choice that too many in the state seem determined to embrace.

This article first appeared in the Orange County Register.

Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

Photo illustration by krazydad/jbum.

Bulgari to Taco Bell: Across China, Buyers Are the Target

Fri, 06/13/2014 - 22:38

I work for myself, and when I travel to China on business I have the “luxury” of sleeping on trains and in hostels, and getting around during the day by bicycle. This spring I made a circuit from Beijing to Chengdu (in western China), to Wuhan (right in the middle), and to Shanghai (east coast), before heading back to Beijing. Ostensibly I was there to hunt down consumer trends.

What I saw was:

  • Cars and smog are killing off the grace of the old cities

  • High-rise apartment towers have doomed more village markets than collectivization did
  • Much of China’s continuing economic boom is a currency sleight-of-hand, and
  • Chinese consumers are a lot less interested in Western brands than CEOs of multinationals would have us believe in their upbeat annual reports

Herewith, notes from the lower berth on many sleepers and the saddle of whatever Giant bicycle I could rent, by which means I covered 3,134 miles in less than two weeks:

Beijing: For grace and charm, nothing in China beats central Beijing. At night, the lights around Tiananmen Square glow like those along the grand canals of Venice. During the day, Beijing suffers from a carbon dioxide whiteout, China’s equivalent of London fog that has made the city a respiratory health disaster.

Beijing is also at the uncomfortable crossroads of a political system struggling to accommodate dialectical materialism with emerging consumer pleasures. But the means of production are distant from Beijing power brokers, a reminder of how Marx railed against absentee landlords.

The biggest contribution that the central bureaucracy has made to the Chinese economic miracle is to depreciate the renminbi to subsidize exports. With an exchange rate of ¥6.25 (yuan) to the US dollar, things that cost $150 in the West, such as a hotel room, are $24 in China.

That accounts for an economic boom on the export side, but limits the demand for imported western products. If you are a Chinese worker who earns, on average, $900 a month, are you going to spend $150 on imported Air Jordans?

The currency mismatch feeds the thriving market in Western knockoffs, but another reason for rip-off branding, I suspect, is that the idea of personal space is alien to Chinese daily life. Translated into consumer speak, that may explain why no one cares a fig about copyright laws, patents or trademarks.

Across China: My train ride to western China lasted more than 24 hours. From my window, beyond the miasma that is Chinese air, were countless high-rise towers, many forty or fifty stories high, where rural residents have been resettled. Someday, China will be the people’s republic of tenement housing. The next revolution will begin when enough elevators are out-of-order.

In the meantime, local shopping has become as centralized as once was the communist party. Big box stores — from Home Depot to the French supermarket Carrefour — are betting the ranch on making it alongside these brave new world housing complexes.

The do-it-yourself corporate entities — a big fixture of malldom — have not yet figured out that Chinese women, not men, drive the Saturday afternoon purchases, and that few Chinese have SUVs to haul the stuff home.

Chengdu: Yet another faceless city of the Asian miracle, Chengdu is clogged with late-model cars in traffic, and dotted with western boutiques and high-rise buildings.

Cartier and Bulgari are on the best corners, but what attracts local crowds is American fast food, the ideal combination of Asian, on-the-go convenience and international branding, held together with US trans fats. Shares in YUM! Brands — the Chinese franchise owners of KFC, Pizza Hut, and Taco Bell — are up 600% since 1999.

South of center city, I biked past the world’s largest building, the New Century Global Centre, about the size of four Astrodomes with the façade of an airport terminal. Part mall, part exhibition center, water park, university, iMax cinema, hotel, restaurant, and office complex, it's a consumption monolith. Still, it has the feel of an enormous recycling center where government money is, so to speak, washed (maybe at the artificial beach?) into the accounts of the new class. So much for the Chinese economy prospering only as the result of long work hours.

Wuhan: East of Chengdu, this Yangtze River city is a conglomeration of three Qing Dynasty districts into a modern juggernaut. It saw the first outbreak of the 1911 Revolution, remembered with a few Sun Yat-sen statues and museums (although he was in Hawaii when the first shots were fired).

Crossing the Yangtze on a ferry — new China as a slow passage through the heart of darkness — the river water was the consistency of crankcase oil, and smog obscured the far shores, no doubt the byproduct of all that Appalachian coal that gets exported to China on Warren Buffet’s trains and bulk carriers.

Doing my field research on Chinese consumerism in several superstores, including Walmart, and at Starbucks, I was fascinated at how little Western companies cater to Chinese tastes. It's not only that there’s no Dragon Latte at Starbucks. One of the sins of branding is to add Chinese characters to Western labels, so French supermarkets in China look just like those in Paris.

Maybe the centrally planned economy is alive and well, but it's living in exile in places like Arkansas or Seattle? At least I didn't hear anyone in Wuhan complaining about aisles full of junk made in China.

Shanghai: Its new reputation is as China’s New York City, a blend of high-rise glitz and coastal sophistication. But that’s if you are in expense-account Shanghai, eating in all those revolving restaurants. I got around on long marches to metro stops and by bus and taxis— China on five traffic-jams-a-day.

At a food services convention that I had travelled to attend, huge exposition halls were devoted to things like espresso machines and Italian gelato, the budding tastes of modern China.

From the view at the convention hall, China looks like a treaty port of Western desires, with Mao’s capitalist road running through it. I wonder, though, if shoppers will ever make the switch from street vendors to the Great Mall.

On the outskirts of Shanghai, a colonial-style shopping center had everything from Pizza Hut to Ben and Jerry’s ice cream. It was awash with French wines, English clothing, American cosmetics, Spanish fashions, and Swiss pharmaceuticals, but, when I was there, few customers. It felt like an ultra-upscale military PX, although the shoppers were as listless as terra cotta warriors. Build it and they will come?

Wandering the aisles of China's consumption centers, I came to the conclusion that Western sales representatives (with their sample bags) are the new missionaries. They've come to the East to preach salvation, based on new packaging for old products, but they're as rigid in sticking to the gospels of Home Depot as they once were about peddling the Book of Mormon.

As André Malraux wrote in 1933, as prescient about the Chinese revolution as he was about 2014 consumers, “Europeans never understand anything of China that does not resemble themselves.”

Matthew Stevenson, a contributing editor of Harper's Magazine, is the author of Remembering the Twentieth Century Limited, a collection of historical travel essays. His new book, Whistle-Stopping America, was recently published.

Flickr photo, in Beijing's Oriental Plaza shopping mall, & caption by Ming Xia, The Coca Cola Store: "China is a very receptive market to brand extension programs - Playboy clothing and Pepsi sneakers are ubiquitous in the PRC… this looks to me as if it is a test unit."

Florida: When Density is Destructive

Thu, 06/12/2014 - 22:38

Brick streets, mature old oaks, and a sense of history imbue Winter Park, Florida with a sense of place that is the envy of many small cities and towns. The tony Park Avenue brings shoppers and visitors, who soak up its ambience and enjoy the street life of this quaint southern town. On the east side, bounded by blue lakes, lie gentrified historical mansions, while the west side is a neighborhood of smaller, affordable homes with multigenerational Winter Parkers. This community of little single-family homes is now endangered by developers that are gobbling up parcels two and three at a time, increasing the density threefold, and squeezing out residents in a new, “zoning for dollars” economic climate.

Affluence and affordability have always maintained an uneasy truce, and the balance between them has historically been protected by cities through planning policies and an understanding that the mission of a city is to be workable for all of its residents, not just the wealthiest. Unfortunately, this balance tilts when the density imperative drives land values up, and tips the scales in favor of half-million dollar townhomes. High density has become fashionable in Winter Park these days, as it has in many cities, and there are some benefits to this new style. The costs? Well, those will be counted later.

Density’s benefits look great on paper: a higher tax base, expensive new housing, walkable urbanity. When implemented well, these can make for positive changes. Advocates preach careful, sensitive ways to develop: don’t smash large and small buildings together; don’t mix uses on a street, and ramp up from low to high density across a gradient of a block or two. Advocates also preach a consensus-building process to avoid neighborhood clashes over growth issues. In places where this has happened, like Coral Gables in Miami, the story has mostly been a good one.

The west side of Winter Park, with its cottages and modest residences for families, dates back to the 1920s. Within the neighborhood are many small churches to which residents walk on Sundays. Playgrounds, parks, and a community center characterize the West Side’s tree-shaded streets, and its proximity to the downtown area means jobs for many of its residents. For the last ninety years, the city has evolved around this neighborhood, and many families go back several generations. Its diversity includes many African American families, mixing with whites. It carved out a niche in the city.

Today, the West Side is an older and less affluent neighborhood that happens to be close to a desirable address. The West Siders have already chosen their preferred building pattern and rhythm, infilling their blocks with new homes of similar size and scale, enlarging the tax base. They already live a walkable urban lifestyle, use mass transit, and evolve with slow and organic growth. In short, every urbanist’s dream.

Like many cities that have a working class enclave that butts up against a newly trendy one, Winter Park has encouraged dense, mixed-use development, while nominally protecting its existing neighborhoods. And this is where the density equation seems to fall apart. The residents who leave the area will no longer participate in the economy of Winter Park. The new residents of half-million-dollar townhomes probably won’t ride the bus, walk to the churches, or otherwise activate the local streets. So a natural piece of the city is lost forever. Urbanism, for all that has been written in favor of this ideology, is diminished for the sake of density.

West Siders protested in City Hall, asking the city not to upzone their neighborhood. While City Hall nodded to its citizens, it had already quietly allowed upzoning to take place, taking advantage of tired homeowners who decided to cash in. Half-million-dollar townhomes, which could be built in other areas, are instead being built here, to take advantage of low land values. Parking garages and midrise apartments now cast shadows on the adjacent small houses. Land values may rise on those parcels with new townhomes and midrise apartments, but immediately next door, the remaining adjacent little one-story cottages become particularly undesirable; the value of those homes becomes depressed. The owners' only hope is to sell off to a high-density developer. Step by step, high density becomes more and more inevitable as the only solution left.

The market forces at work in Winter Park have played out elsewhere across the country, with old neighborhoods eroding. This time around, with density all but institutionalized as the only acceptable way to grow, the deck seems to be stacked against entrenched locals. Cities are re-writing their development codes in favor of shiny new mid-rises and high-rises, ignoring existing residents who won’t be missed till they are gone.

When the market, an amoral institution without sentiment, threatens neighborhoods, it is the job of City Hall to provide a hedge that ensures balance and fair play. But citizens have to shout over the money in order to be heard, so local groups like the Friends of Casa Feliz have stepped in on their side. If “zoning for dollars” can work against this section of the city, groups fear, then no one is safe, and people are reminding City Hall of its duty as a guardian of its residents.

Density, on its own, is neither a good nor a bad thing. It can make a city more efficient and connected, and proponents tout its reputed health benefits and contribution to a thriving social life. When, in the process of allowing density, a city destroys the very values that it is supposed to promote, then the city ends up cannibalizing its neighborhoods for little benefit other than the one-time gain that the developers will realize from the sale of these newly built products. Income streams are put into mortgage-holders’ pockets, and, bit by bit, one more highly localized economy disintegrates.

City halls, so obsessed with petty regulations, would do well to recall their basic functions as protectors of their residents. If there were a “back to basics” movement for government, many ordinances written to benefit the few would be shed, and there would be a refocus of attention back to the public good. The current infatuation with density, like many fashionable ideas, may come and go, but if a multigenerational neighborhood goes, it won’t be replaced in our lifetime.

Richard Reep is an architect with VOA Associates, Inc. who has designed award-winning urban mixed-use and hospitality projects. His work has been featured domestically and internationally for the last thirty years. An Adjunct Professor for the Environmental and Growth Studies Department at Rollins College, he teaches urban design and sustainable development; he is also president of the Orlando Foundation for Architecture. Reep resides in Winter Park, Florida with his family.

Photo by Betsy Owens of the Friends of Casa Feliz: "Preserved 1920s Cottage on Lyman Street", Winter Park, Florida.

The Long Term: Metro America Goes From 82% to 86% Suburban Since 1990

Wed, 06/11/2014 - 22:38

The major metropolitan areas of the United States experienced virtually all of their overall growth in suburban and exurban areas between 2000 and 2010. This is the conclusion of an analysis of the functional Pre-Auto Urban Cores and functional suburban and exurban areas using the Demographia City Sector Model.

The City Sector Model

The City Sector Model classifies zip code areas in the major metropolitan areas based on urban form (Note 1). These include four classifications, one of which replicates the urban form and travel behavior typical of the pre-World War II urban cores. These areas were typically higher density and dependent on transit and walking. The City Sector Model has three other classifications, Pre-Auto Urban Core, Auto-Suburban: Earlier, Auto-Suburban: Later and Auto-Exurban.

For simplicity the City Sector categories are referred to as urban core, earlier suburban, later suburban and exurban. The City Sector Model is described in a previous article, and illustrated in Figure 1, which is also posted to the internet.

The model makes it possible to analyze metropolitan areas based on smaller area functional classifications, rather than on jurisdictional (historical core municipality) borders, which among other things, mask as core large areas of suburbanization.

Suburbanized Core Municipality Examples: San Jose and Charlotte

This suburbanization in the historical core municipalities is illustrated by examples like San Jose and Charlotte. The City Sector Model indicates that neither of these metropolitan areas has a pre-auto urban core. This is because neither metropolitan area has a large enough concentration of houses with a median construction date of 1945 or before or sufficient area of 7,500 population density per square mile (2,900 per square kilometer) with a transit, walking and cycling work trip market share of at least 20 percent. As a result, virtually all of both metropolitan areas is automobile oriented suburban, including virtually all of the core municipalities.

This is true in Charlotte despite its development of one of the most impressive new central business districts in the nation, with high employment densities. Yet at the same time the  core city of Charlotte itself is very low density (2010), at 2,500 per square mile (950 per square kilometer), less than the suburban area average for large US urban areas (2,600 per square mile or 1,000 per square kilometer). Charlotte, however, could develop the equivalent of a pre-auto urban core if its central population density rises enough and enough commuters use transit, walking and cycling.

The core city of San Jose is far more dense than Charlotte, at 5,800 per square mile (2,200 per square kilometer). However, it is less dense than the suburbs of Los Angeles (6,400 per square mile or 2,500 per square mile). Like Charlotte, the core city of San Jose is virtually all automobile oriented suburban and has a transit work trip market share a full third below the major metropolitan area average.

Overall Population Trend: 2000-2010

These phenomena reflect national trends, All major metropolitan area growth between 2000 and 2010 (100.9 percent) was in the functional suburbs and exurbs.

Between 2000 and 2010, the percentage of major metropolitan area population in the urban cores declined from 16.1 percent to 14.4 percent. The urban cores lost approximately 140,000 residents (a loss of 0.6 percent), despite strong gains very close to the centers of the historical core municipalities. Consistent with these findings, Census Bureau analysis showed that the focused gains in the cores of the urban cores were more than negated by losses in surrounding urban core areas (described in: Flocking Elsewhere: The Downtown Growth Story).

The earlier suburban areas gained only modestly, adding 280,000 new residents, for a 0.4 percent increase. These areas have median house construction dates between 1946 and 1979. The largest increase was in the later suburban areas, which added the most new residents, 11.4 million, for a gain of 33.4 percent. The later suburban areas have median house constructions of 1980 or later. Exurban areas added 5.0 million residents, for a gain of 21.3 percent. Exurban areas are located outside the principal urban areas (Figure 2).

Overall, the later suburban and exurban areas gained 16.4 million residents, compared to the combined gain of 130,000 in the urban cores and earlier suburban areas. Thus, more than 99 percent of the population growth in the major metropolitan areas was in the later suburban and exurban areas (Figure 3).

During the decade, the exurban areas overtook the urban cores in population, rising from 15.4 percent of the major metropolitan area population to 16.8 percent (Figure 4).

Contrast with 1990-2000 Population Trend

Despite all of the talk of an urban core renaissance, the 2000 to 2010 decade was less favorable for urban cores than the 1990 to 2000 decade. In the earlier decade, the urban cores (as defined in 2010) added 960,000 residents, for a growth rate of 4.0 percent. This compares to the 140,000 urban core loss between 2000 and 2010 (Note 2).

Virtually all of the difference was attributable to urban core population trend reversals in New York, Boston and Chicago, which combined experienced a drop in growth of 1.1 million. Between 1990 and 2000, the urban core of New York added 779,000 residents, far more than the 190,000 added between 2000 and 2010. Boston's 1990-2000 urban core growth was 296,000, but fell to 27,000 in the last decade. Chicago's urban core dropped from a gain of 139,000 to a loss of 175,000.

Over the past twenty years, the population of urban cores has diminished relative to that of major metropolitan areas. In 1990, the urban cores represented 18.1 percent of the population, but fell to 14.1 percent in 2010. Auto-oriented areas (suburban and exurban) have increased their combined share from 81.9 percent of the major metropolitan area population in 1990 to 85.6 percent in 2010 (Figure $$$).

Summary of Individual Metropolitan areas

In 30 of the 52 major metropolitan areas, all or more of the population growth was in suburban and exurban areas between 2000 and 2010. This includes the metropolitan areas that do not have Pre-Auto Urban Cores.

Chicago had the largest share of suburban and exurban population growth, at 148 percent. This occurred because of the substantial urban core population losses. The suburbs and exurbs of Providence captured 131 percent of its growth, slightly more than the 126 percent suburban and exurban share in St. Louis. Baltimore, Rochester and Milwaukee had more than 110 percent of their growth in the suburbs and exurbs. Cincinnati, Indianapolis, Louisville, and Kansas City rounded out the largest suburban and exurban growth shares, all over 105 percent.

Despite the substantial decline in its urban core growth in the last decade, New York had the lowest share of population growth in the suburbs and exurbs (meaning that it had the highest share of population growth in the urban core). The suburbs and exurbs of New York captured only 69 percent of the metropolitan area growth, well below second place, Virginia Beach – Norfolk (81 percent). Boston was next at 83 percent, followed by San Francisco – Oakland, at 88 percent. The bottom 10 in suburban and exurban growth share also included Seattle, Washington, Philadelphia, Richmond, Hartford and Portland. Even so, each of these six metropolitan areas had more than 90 percent of their growth in suburban and exurban areas (Figure 6).

Jurisdictional Analyses: Suburbs Masquerading in Cities

The functional analysis based on urban form and behavior reveals substantially different trends compared to the conventional jurisdictional analysis that compares historical core municipalities, principal cities or primary cities to the balance of metropolitan areas. For example a jurisdictional analysis shows that core municipalities added 1,290,000 residents between 2000 and 2010. In contrast, the urban cores, as indicated in the functional analysis, lost 140,000 residents. This indicates the extent of to which municipal boundaries can mislead in the analysis of urban form within metropolitan areas. The expansive city limits of most core cities masks the substantial automobile oriented suburbanization within their own borders.

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Note 1: The City Sector Model is generally similar to the groundbreaking research published by David L. A. Gordon and Mark Janzen at Queen's University in Kingston Ontario (Suburban Nation: Estimating the Size of Canada's Suburban Population) with regard to the metropolitan areas of Canada. Gordon and Janzen concluded that the metropolitan areas of Canada are largely suburban. Among the major metropolitan areas of Canada, the Auto Suburbs and Exurbs combined contain 76 percent of the population, somewhat less than the 86 percent found in the United States.

Note 2: Changes in zip code definitions and boundaries could result in minor differences in comparability between the three censuses.

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Wendell Cox is 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 was appointed to the Amtrak Reform Council to fill the unexpired term of Governor Christine Todd Whitman and has served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Photo:  Later Suburbs in New York Urban Area (Morris County, New Jersey), by author

Columbus, Know Thyself

Tue, 06/10/2014 - 22:38

What Is Your Ambition?

Columbus doesn’t have a powerful brand in the market outside of Ohio. Having said that, the city is growing rapidly in population and jobs, is extremely livable and improving day by day, and seems to make its residents very happy. Is there any reason the city has to be better nationally known in order to be complete or something?

I say No.  It’s a valid choice to simply stay with the status quo.

Many citizens may indeed feel that way, but much of the city’s leadership doesn’t. This was hammered home in a 2010 New York Times piece on the city’s rebranding efforts. That desire to be seen as a high caliber city at the national level clearly came through in my most recent trip, even from Mayor Coleman himself.

I also tend to be personally biased towards high ambition, particularly in a place where it’s obvious that the ambition can be realized.  Columbus is that place, in contrast to long troubled regions  like Detroit and Cleveland are really struggling to rebound from severe problems. And no matter what they do, they will never recover the national stature they once enjoyed.   

Columbus is both operating from a baseline of strength, and also at a point where it is still on the way up as a city.   Columbus has never been a larger, more important, more prominent city in the world than it is right now – and it has the potential to reach still higher  Not every city and not every generation is granted the opportunity that Columbus has right now.  

Finding Columbus’ Mojo

But assuming the answer is go for it, then what needs to be done? There is a need to go beyond the checklist.

The first thing  is to really be committed to change and going after the brass ring. This is not an easy journey to make. Some of the things you are going to have to do are really, really hard because they involve looking  closely at civic insecurities, and also questioning perhaps your most fundamental and cherished truths, especially the truth about what you’re best at.

It’s very hard for cities to admit where they are weak, but it can actually be even harder for them to admit where they are strong.

One of the sayings of the Greek oracle was “Know Thyself.” Sage wisdom, indeed. Knowledge of yourself is often the most difficult to come by but valuable of commodities. Because as the saying goes, “Without awareness there is no choice.”

Where does a city get knowledge of itself that’s useful for branding? I argue it very often comes from the past. Cities didn’t just take their present form overnight. They are the process of a long process of growth and change. In particular, the founding ethos of a place profoundly stamps its character, usually in a permanent way. The Dutch trading culture and spirit of openness of New Amsterdam is still present in contemporary New York, for example.

When a new creative director comes in to revive a failing fashion house, what’s the first thing he does? He goes to the archives. He investigates the history of the house. What does this brand stand for? Who were the people who founded it? How did they become who they were? What happened along the journey of that house?

To use a hackneyed phrase, that new creative director wants to understanding the “Brand DNA,” and the key to the brand DNA is in the past.

I think that’s as true of Columbus as anyplace. Columbus certainly had good luck in getting where it is today, but I’d argue there’s more to it. One of their historical keys to success was a fateful decision in the 1950s to pursue an aggressive annexation strategy. You can say that was one mayor’s choice, but I believe the fact that it happened in Columbus and not elsewhere in Ohio signaled  that there was something different about the city. What is it?

You need to start with an anthropological, archeological, historical deep dive into a city, its people and its culture. I’d suggest tapping into Ohio State’s cultural anthropology resources. There might even be a dissertation in it for someone.

Aspirational Narrative

One you have the mojo, you not only use it to build the future reality, you also sell it by telling the story of Columbus to the world. You need to create an aspirational narrative of the city that people can imagine themselves being a part of.

Think of the story of New York. TV shows like Friends, Sienfield, and Sex and the City have created a contemporary positive narrative of life in New York. People know what it’s about. If you can make it there, etc. (This wasn’t always the case. Escape from New York, Death Wish, and Fort Apache the Bronx told quite a different narrative in a previous era). Portlandia tells a story about the place where young people go to retire. Think about the Bay Area, LA, Miami, etc. and the stories come to our heads without much thinking.

What’s that story of life in Columbus? You create that story around the authentic mojo of the city.

What’s on your rap sheet?

Beyond finding the mojo, there’s another key task that goes along with the investigation. That’s finding the missing or defective genes in the civic DNA that could sabotage the city’s ambitions.

Everybody’s got a rap sheet. The only question is whether or not we know what’s on ours. When I was working in corporate America I knew if I was getting nothing but glowing feedback from my boss, if Ihad nothing I need to get better at, I was dangerously blind. If not, why was I not the CEO of the company? Clearly, there’s a reason why I am where I am and not the President of the United States.

So Columbus needs to understand not just checklist items it is missing like a major transit investment, but also cultural items that are holding the city back and what they are rooted in. Then it can attack them with a change program that can hopefully work, like the civic equivalent of therapy.

On a related note though methodologically different, the city needs to be willing to take a hard look in the mirror and realistic assess its assets and accomplishments and how compelling they are in the market. The cold reality is that while Columbus is a great city in many ways and has lots of great stuff, what it has doesn’t add up to a nationally or globally compelling story. You need to take the marketing glasses off and ask how people who aren’t in or from the city   see things.

That doesn’t necessarily mean you recategorize your assets as bad. But you have to understand that checklist items that lots of other cities are doing (e.g., bike infrastructure) are probably not going to set the city apart in the marketplace. If you don’t have it, you’re in trouble. But if you do, it doesn’t win the game. These things are just the new urban ante.

Illustrative Applied Examples

I want to give a quick examples – and let me stress this is provisional and speculative to some extent – illustrating these three points.

On the mojo front, the city’s previous branding effort that identified “smart” and “open” as two key civic attributes is right on in my view. It’s a good start. But why is Columbus open? That is, why is it easier for newcomers to acclimate, penetrate networks, accomplish things, etc. in Columbus than in many other places?

I speculate it’s rooted in being the state capital. I’ve seen a similar trait in other capitals. I speculate that because people from all over the state are coming to Columbus on political business, and because there’s always churn in elected office, civic networks don’t become closed and calcify in a sort of “Why the Garden Club Couldn’t Save Youngstown” effect.

For the missing gene example, I think it’s very possible that one reason Columbus didn’t create a compelling, unique product in the market is that it it’s just not in the civic DNA. One local leader I talked to speculated that the city’s values were shaped by those of Ohio State football and Woody Hayes. That is, the secret to success is to work relentlessly at the fundamentals and always be pounding the ball ahead with the running game – “three yards and a cloud of dust.” Not exactly the West Coast Offense. This may be too facile, but it is clear that Columbus excels at the fundamentals, the blocking and tackling of city stuff, but hasn’t thrown the civic equivalent of the long bomb.  

For the asset evaluation example, I think Columbus needs to be realistic about Ohio State’s stature. Ohio State is a great school, but it’s not Harvard or Stanford. I went to Indiana University and I’d say the same about them. Now, obviously you’d never come out in public and downplay Ohio State, which legitimately is a power house for the city. But you don’t want to mistakenly believe it’s doing to spawn the next Cambridge or Palo Alto without some major change either.

It’s Cow Town, Jake

To truly discover the secret of its mojo, Columbus needs to be willing to stare into the abyss of cow town.

Talk to people in Columbus and you’ll hear them claim that they are not a “cow town” anymore or how people used to refer to them as a “cow town.” I have seen this as an analogy to the case of Indianapolis and “naptown.” I’ve always doubted that hardly anyone outside of Indianapolis itself ever used the term Naptown historically as an insult. No one would ever have cared enough about the city to even bother insulting it.

Similarly, I’d never heard the term cow town until somebody from Columbus told me about it. I strongly doubt it’s ever really been a term of derision nationally, at least not outside Ohio. I know there’s a strain of Cincinnatian who loves heaping abuse on places like Columbus and Indy. As Columbus has grown while other cities in Ohio wandered in the wilderness, it’s easy for me to believe there’s been a lot of sniping. So while the market would never think of Columbus as cow town, there may be some legitimate in state reasons for them to be sensitive to the term.

The impression I get, again provisional based on my limited experience, is that in an attempt to rid itself of the stigma of being a cow town, Columbus has sheared off its past, in effect repudiating everything that happened before 1990 or 2000.

I observed to Mayor Coleman that Indianapolis in recent years has downplayed the 500 Mile Race. I asked him whether or not Columbus was similarly neglecting its greatest brand asset in the market by downplaying Ohio State football. He said, “No. There was a time in the 60s and 70s and the 80s, and even the 90s, where Columbus was nothing but Ohio State football. And I love the Buckeyes; I love the football team. It’s better than any professional team in the state of Ohio. And they’re still amateurs. That’s good. But having said that, Columbus is no longer just the Ohio State football team. We don’t view ourselves that way anymore [emphasis added].”

This seems consistent with what I hear from other people. There’s an embedded idea here that there’s little to nothing of value in the city’s past and in fact that past is something to be embarrassed about or outgrown. I have never heard anyone from Columbus brag about their city for anything related to the past, apart from historic architecture.   For example, the mayor went on to talk about the importance of Ohio State in terms of its contemporary research impact. I’m not sure I’ve ever heard a city talk less about its heritage.  That lack of historic rooting may be one reason why the city can come across as somewhat generic.

As I’ve noted before, this is normal for us to go through. When we go off to college, Mom puts our high school letter jacket up in the attic. We try as hard as we can to fit in at the new level, and treat the stuff we left behind as little kids stuff.

But eventually we become comfortable in our own skin. We learn who we are and what we stand for, and we stop becoming so concerned about what other people think of us. Of course we are social creatures and will never stop caring about others’ perceptions of us. We find a healthier balance.

The same is true of cities. Columbus is far enough along in its growth path to really be comfortable being itself, and acknowledging and embracing its past.

This doesn’t mean Columbus should be or ever was a cow town. What it does mean is that things from its past that Columbus   are actually its strongest brand assets and things to be proud of and build its future on.

Let’s give some examples. The Midwest has a history of local, low grade lager brands. Virtually all of these were abandoned and ceased production. The hip, cool thing to do was to drink microbrews, not even Bud or Miller Lite, to say nothing of Sterling (my dad’s brand).

Then one day the hipsters on the coasts started drinking Pabst Blue Ribbon, and all of a sudden back in the Midwest, we started drinking it too and now are re-launching or re-embracing all those old blue collar brands (including Sterling). The same thing happened with workwear clothing, which is now selling for quite a premium in some places and very popular among the Bearded Ones.

In effect, we had to re-import our own heritage after a bunch of other people elsewhere saw the value in it – the same heritage we rejected as “cow town.”

The clearest example of this is agriculture. The Midwest is all about ag. Ohio State is a huge ag power house. Columbus could have owned urban agriculture, farm to table, organics, etc. But it didn’t. And now it’s doing them, but it’s doing them as the follower, not the leader.   

This is one of the tragedies of the Midwest. We turned away from our heritage and a bunch of guys in Brooklyn bought it from a thrift store for a song.

The South avoided this. Look at Nashville. Did they turn their back on country music as “cow town”? No, they embraced it as central to their identity past, present, and future. Of course they are more than country. But they kept it front and center. But they also updated it. It’s not the old AM radio country. It’s not Hee Haw. They respect those people and institutions and see them as in continuity with today, but they have evolved. Today’s it’s glitzier, “Nashvegas.” Think Carrie Underwood, not Minnie Pearl.

This is what it means to know thyself and build the future out of the authentic mojo of the past. Columbus surely has many things in its past and in its historic civic character   of immense value. The question and the challenge to the city is being willing to find out what those are and own and embrace them and champion them as a key part of the mojo on which it will build its future reality and aspirational civic narrative.

I believe the potential is right there. The question is whether the city is ready and willing to step up and grab it.

Aaron M. Renn is an independent writer on urban affairs and the founder of Telestrian, a data analysis and mapping tool. He writes at The Urbanophile, where this piece originally appeared.

Inland California Needs to Get in the Zone

Mon, 06/09/2014 - 22:38

California’s dream is shrinking inexorably, and only radical steps can prevent the condition from becoming permanent. Compared with previous economic expansions, fewer state residents and communities are benefiting from this recovery, which has largely been restricted to the small coastal zone surrounding the Bay Area, as well as certain parts of western Los Angeles, Orange and San Diego counties.

As the economy has strengthened, what is called a “boom” in the mainstream media is really a story of one region. Some 300,000 jobs have been created as the recovery has strengthened over the past 15 months,but three-quarters of them have been concentrated along the coast, mostly in the San Francisco-San Jose corridor.

In contrast, much of the interior of the state, from the Inland Empire, where the poverty rate has doubled since 1990, to the Central Valley, is doing far less well. Unemployment has dropped to near 5 percent in the Bay Area, but remains above 8 percent in the Inland Empire, and above 10 percent in many interior communities, from Fresno and Modesto to Bakersfield. Viewed in the national media as some sort of permanent basket case, the inland regionbooming a decade ago, was recently compared by a UCLA economist to Appalachia.

Get in the ‘zone

California’s interior clearly needs a form of new deal that will allow it to participate in the state’s recovery. This plan starts with declaring the entire area an “enterprise zone” that allows communities to opt out from some of the harshest, coastally driven regulations.

Enterprise zones typically refer to economically ailing portions of cities where policies to encourage economic growth and development are implemented for businesses in the designated area. Such policies, on a regional scale, are needed in inland California.

Extraordinary controls on development, expensive “green energy” policies and high taxes on small enterprises may seem reasonable, or at least bearable, in a coastal economy fueled by soaring capital gains, with the prospect that the gentry rich can supply trickle-down service jobs to the hoi polloi.

But such policies are often disastrous for the state’s interior, which lacks the resources or appeal of the coastal havens. Take the issue of electricity prices, which have soared, in large part, because of the green-energy policies favored by influential residents along the coast. Energy costs for many California businesses are roughly twice those for consumers in the Pacific Northwest, Salt Lake City or Denver. Yet here’s the rub: The climate along the coastal strip requires less air conditioning or heating, unlike that of the interior regions, where temperatures rise and fall more severely.

Worse yet, there’s more pain to come: California’s recently enacted carbon “cap and trade” system could boost gasoline prices, already 55 cents per gallon above the national average, another dollar.

Unaffordable Coast

Many wealthier coastal residents can afford housing close to major job centers and, for that matter, more expensive gasoline. But the same pump prices are a dagger aimed at the finances of many middle- and working-class people who live in the interior and have to commute to employment. The gentry retort – that such people should move to the city – ignores the fact that most middle- and working-class people can’t afford to live decently in places like Los Angeles, much less San Francisco, given current prices.

People in recent decades have moved to the interior largely to improve conditions for their families, not to lower their quality of life. Rising gas prices won’t lead them “back to the city” but, more likely, will force many to cut back further, or consider moving elsewhere. There’s no discernible movement of people to the coastal counties from the interior; if anything, the pattern, although less marked than a decade ago, remains quite the opposite.

Despite a growing population, the long-term sustainability of the interior’s economy now is questionable. High energy costs, onerous regulatory burdens and land-use constraints imposed by Sacramento are systematically undermining industries that have traditionally driven growth in the state’s interior. These include construction, manufacturing, ranching and farming, along with logistics and business services, all of them employers of middle- and working-class Californians.

Creating an expansive enterprise zone would allow these businesses to compete more successfully with other states. It might encourage, for example, manufacturers leaving or expanding away from the coast to head to inland California instead of to another state, or propel builders to construct affordable housing, including single-family homes, in places like the Inland Empire, as opposed to in Texas or Arizona.

Why should the Bay Area oligarchy agree to such a step? One reason may be to avoid the soaring cost of supporting so many poor and needy people in the interior. When the tech bubble bursts, the state will face another cash crunch. Having a vast impoverished population then will mean even higher taxes and worse services, something that will affect all but the most high-end businesses.

Dreams, green or otherwise, take money, but our bifurcated economy relies increasingly on the fortunes of the few. California’s top 1 percent of earners paid 50 percent of state income taxes in 2012, up from 40 percent the year earlier. This is not surprising since so much of the state is either impoverished or stagnating. Once aspirational regions, proud contributors to the Golden State’s economic diversity, increasingly resemble dependent countries in the Third World.

Modern-day progressives respond to these realities by pushing for such things as raising the minimum wage, or imposing even more Draconian labor regulations. This may help some low-income workers, but it’s hard to see how it would boost the interior’s competitiveness. In contrast, the creation of an enterprise zone would give these areas at least a fighting chance.

Ultimately, what kind of California do we want for our children? Right now, the state is evolving into something of a neofeudalist society, consisting of an affluent few, concentrated in the coastal belt, a large and expanding poverty class and a struggling, shrinking middle class. There’s the California of the oligarchs with 111 billionaires, by far the most of any state, with personally held assets worth $485 billion. Together, they own more than the GDP of all but 24 countries in the world. At the other end of the scale is a state with the nation’s highest poverty rate (adjusted for housing costs) – above 23 percent – and roughly one-third of the nation’s welfare recipients.

This condition has been aptly labeled by one Central Valley writer as “liberal apartheid.”The well-heeled, largely white and Asian coastal denizens live in an economically inaccessible bubble – due to extremely high housing prices – while the largely poor, working class, heavily Latino communities eke out a meager existence in the state’s eastern interior.

To be sure, many forces beyond Sacramento’s control – globalization, immigration, the asset-oriented nature of the recovery – have contributed to this growing wealth gap. But gentry-led pubic policies have exacerbated the refeudalization. Young Californians, notes one study, already are now less likely to graduate from college than were their parents.

A Shrinking middle

Meanwhile, the middle class, the social and economic linchpin of the state, continues to decline, with a far more dramatic drop in state households earning $35,000 to $75,000, according to research from the California Lutheran University forecast project, than the national average. As late as the 1980s, the Golden State was about as egalitarian as the rest of the country, and roughly 60 percent of its population was middle class. But now, for the first time in decades, the middle class is a minority in California.

In fact, many Californians face a future as modern-day land serfs, renting and paying someone else’s mortgage. If they choose to start a family, they increasingly look to settle elsewhere, ironically, some to locations like Oklahoma and Texas, places that historically sent eager migrants to the Golden State, whose appeal combined economic opportunity, its milder climate and spectacular scenery.

The prospect facing California is not unlike that seen in other Democratic-dominated regions, such as New York, where a well-organized and savvy, affluent, urban minority can impose ever-greater restrictions on the relatively unorganized, inarticulate exurban populations. Like New York’s Appalachia-like upstate regions, interior California faces a dismal future that, over time, will lead to increasing demands on the middle and upper classes. Only by allowing the interior a decent chance can California truthfully claim that its economy has, indeed, turned around.

This article first appeared in the Orange County Register.

Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

Photo by Altus via Flickr

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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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