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NFL Fantasy Meets EU Brexit

Fri, 10/30/2015 - 21:38

Will Britain vote before the end of 2017 to stay in the European Union? Or will it leave, launching the much-debated Brexit? As the Lions face the Chiefs this Sunday in London, a perhaps related question is whether London should be awarded a franchise in the National Football League. Many Londoners would love nothing more than for the city to be granted a team, even if that team turns out to be the Jacksonville Jaguars, who are considering whether to become the first NFL exiles. If Britain were to leave the EU but join the NFL, maybe the last act of the American revolution will be a reverse takeover of England.

Before explaining the English romance for what they call “American football,” let’s briefly review why Britain is getting cold feet about the EU. Keep in mind that the United Kingdom is an EU member more in spirit than on the ground, as Britain kept the pound as its currency, and has yet to embrace the Maastricht treaty on open borders. About all it conceded to the Union on immigration was a relaxation of the quarantine for cats and dogs.

Britain liked the EU when it meant that Brits could easily buy condos in the south of Spain, or import duty-free claret from Bordeaux. It has had less enthusiasm for providing social services for Polish emigrants or bailing out insolvent Greek banks.

The chances are good that Britain will be the first major power to bolt from the Union. For the moment, those supporting Brexit span the political spectrum, and include left-wing Labour socialists—angry at Europeans for taking away British jobs—and Tory rebels, for whom the EU is yet another melting-pot being dumped on traditional English values.

Nor has the Balkanization of British politics helped the European cause. Prime Minister David Cameron, whose Conservatives enjoy an 8 seat majority in the House of Commons (but have 98 seats more than Labour, with many fringe parties taking up the balance), supports staying in Europe with some “fundamental” modifications to the terms of British membership. But if the price of power for Cameron means ditching the Europeans, he might be the first to whisper “wogs out” at the Tory club bar.

Cameron’s political luck, so far, is that his term in office has coincided with the self-destruction of the Labour party (from 256 seats down to 232) and the near-extinction of the Liberal Democrats, who in the last election went from having 56 seats in the Commons to 8.

In the 2015 election, Labour also found itself bounced out of Scotland, with its supporters going to the Scottish Nationalists. Then it replaced opposition leader Ed Miliband with Jeremy Corbyn, a dyed-in-the-wool, North London, Tony Benn socialist who dreams of nationalizing industry, and possibly — although not probably — reinstituting 1970s coal miner strikes and BritRail cold pork pies.

After their electoral losses, the Labour faithful decided to vilify their last prime minister, Tony Blair, now the most unpopular man in British politics, for abandoning socialism in favor of his New Labour concoction, which was the British equivalent of Bill Clinton’s cozy triangulation with House Republicans in the 1990s.

Labour’s lurch to the far left has put the Tories in position as Britain's leading national political party. But they cannot find much consensus around centrist, pro-European opinions, as Conservatives have the dichotomous challenge of keeping Scotland and maybe Wales in the United Kingdom while watering down the appeal of nativist, skinhead nationalist parties.

The most visible European opposition to EU membership comes from the right-wing UK Independence Party (UKIP), although it only has one seat in the Commons. Scottish Nationalists, who went from 6 to 55 seats, for the moment are pro-EU, and a negative vote on Europe might renew the push within Scotland to leave the United Kingdom.

With the center unable to hold, it is no wonder that London has embraced the National Football League as if it were a wartime support convoy. My younger son and I recently went to Wembley Stadium to watch the New York Jets play the Miami Dolphins, and at the same time see how London views the NFL. We were part of a throng of 83,000 (keep in mind that UKIP’s entire membership is only 47,000), few of whom seemed much concerned about the future of the European charter.

To be sure, the crowd included diehard Jets and Dolphin fans who flew in for the game. Seated in front of us were three older guys (I could have been one of them) wearing Klecko, Namath, and Maynard jerseys, and no one would mistake them for moonlighting Arsenal fans taking in some American “footie.”

Many of those in the stands wore American football jerseys from the closet depths. Wembley Stadium was temporarily transformed into a NFL Halloween parade with the likes of Rodgers, Roethlisberger, Montana, Rice, Gastineau, Luck, Romo, Marino, and Peyton Manning astride the stadium ramps.

I associate British football (okay, soccer) fans with drunken hooliganism, but this sober crowd stood to sing “God Save the Queen,” and it applauded the Dolphin cheerleaders as if they were a road opera company.

Unlike a European soccer game with all the advertisements jammed into halftime, the Jets and Dolphins "match" took almost four hours to complete.

During the long afternoon there were booth reviews, thirty-second time outs, injuries, instant replays, concussion protocols, pauses after each quarter, and the two-minute warning, which felt like three-week business trip (“Hey Queen Elizabeth, this Bud’s for you!”).

So frequent were the official time-outs for beer and car commercials, after a while Wembley had the air of the Universal Studios back lot, and the Jets and Dolphins looked like extras, hired out for a day of filming.

The Jets beat the Dolphins, although for much of the second half they tried to snatch defeat from the jaws of victory. (It is, after all, the 45th year of their rebuilding program.) Mercifully for Jets fans, the refs littered the “pitch” with penalty flags, and they nullified a Dolphins drive that started one yard from the Jets’ end zone.

During many time-outs, I wondered why the British might vote out the European Union (and its time-efficient, free-flowing soccer matches), and vote in the NFL, or at least lobby it for a local franchise. In British soccer the clock never stops, not even for injuries, and the game ends in two hours. Neither side has cheerleaders in sequins.

My guess is that that the London romance with the NFL speaks to UK ambivalence about the continuing embrace of the European Union.

American football might be, as my British friend Simon Hoggart said, “random violence interrupted by committee meetings,” but unlike the European Union it has clear winners and losers and ends with a Super Bowl, as opposed to a wobbly common currency, milk subsidies, and Greeks on the dole.

Will London trade EU membership for an NFL franchise? My guess is that it will. During the ill-fated NFL Europe attempt, London had the Monarchs, who could not keep pace with Düsseldorf’s Rhein Fire, and the league folded. This time, among the team names they should consider are the Queens, Kings, Beefeaters, Towers, Guards, and Tussauds. I can’t quite come to terms with the London Jaguars. It sounds like a car dealership.

Would 83,000 fans have turned up for a Jeremy Corbyn or David Cameron speech on Brexit? I doubt it. Who really knows if Britain wins or loses by being in the European Union? It's one of those political issues that is impossible to decipher, except on an emotional level.

Or, as Joe Namath, the legendary New York Jets quarterback and counterculture figure, said of an earlier dilemma, “I don’t know if I prefer Astroturf to grass. I never smoked Astroturf.”

Matthew Stevenson, a contributing editor of Harper’s Magazine, is the author most recently of Remembering the Twentieth Century Limited, a collection of travel essays, and Whistle-Stopping America. His next book, Reading the Rails, will be published in 2015. He lives in Switzerland.

Flickr photo by Tony Webster: NFL on Regent Street, London

End Of One-Child Policy Is Unlikely To Solve China's Looming Aging Crisis

Thu, 10/29/2015 - 12:51

By finally backing away from its one-child policy, China would seem to be opening the gates again to demographic expansion. But it may prove an opening that few Chinese embrace, for a host of reasons.

Initially, the one-child policy made great sense. The expansion of China’s power under Mao Zedong was predicated in part on an ever-growing population. Between 1950 and 1990, the country’s Maoist era, the population, roughly doubled to 1.2 billion, according to U.N. figures. Deng Xiaoping’s move to limit population growth turned out to be a wise policy, at least initially, allowing China to focus more on industrialization and less on feeding an ever-growing number of mouths.

Three decades later, this policy clearly has outlived its usefulness. China’s population growth is now among the slowest in the world, and it is aging rapidly. The U.N. expects the Chinese population to peak around 2020, about when India will pass the Middle Kingdom as the world’s most populous country.

Perhaps the most troubling impact will be on the workforce. In 2050, the number of children in China under 15 is expected to be 60 million lower than today, approximately the size of Italy’s population. It will gain nearly 190 million people 65 and over, approximately the population of Pakistan, which is the world’s sixth most populous country.

The same broad pattern will play out in Taiwan, South Korea, Singapore and Japan, but those countries’ much greater per capita wealth gives them a greater ability to cushion the impact than China. Demographer Nicholas Eberstadt envisions a developing of fiscal crisis in China caused by “this coming tsunami of senior citizens,” with a smaller workforce, greater pension obligations and generally slower economic growth.

These factors were clearly part of the calculus that led to suspending the one-child policy. But if China’s rulers think they can change demographic trends on a dime, they are massively mistaken.

The birthrates of many other East Asian countries have plummeted as well, despite campaigns to promote fertility. In South Korea, Taiwan, Japan, Singapore birthrates are near one per woman, roughly half the rate needed to sustain the current population. With the exception of Singapore, which accepts many immigrants, none have a reasonable path away from rapid aging of their populations and shrinking workforces.

So what is causing this plunge? Gavin Jones, a demographer based at the National University of Singapore, identifies primarily rapid urbanization and sky-rocketing house prices. In 1979, China’s population was 80 percent rural; today the proportion is roughly half that.

This transformation makes reversing the one-child policy largely moot, Jones says. Indeed a 2013 easing of restrictions on family size in certain circumstances elicited far fewer takers than expected. Barely 12 percent of eligible families even applied.

One critical problem is the high cost of real estate, particularly in China’s most important cities, which makes it difficult for young couples to attain the space to house a larger family, let alone leave them sufficient financial resources to raise the children. China’s main cities have suffered arguably the world’s most rapid growth of property prices relative to income. Last year, The Economistestimated house price to income ratios of nearly 20 in Shenzhen 17 in Hong Kong and over 15 in Beijing, between 50% and 100% higher than ultra-expensive Western places like San Francisco, Vancouver or Sydney.

This explains in part why prosperous cities like Shanghai and Beijing, now have among the lowest fertility rates ever recorded — down near 0.7 per woman, or one-third the replacement rate. If the experience of densification and high prices spread to other Chinese cities, officials may be lucky if couples even bother to have one child.

One alternative strategy may be to slow urbanization and disperse population to less congested areas, but policy seems to be headed in the exact opposite direction. In 2013 China announced plans to bring an additional 250 million people from the countryside into the city.

This could boost the economy, as planners hope, but also reduce the fertility rate. All over the world the displacement of rural populations, accelerate the pattern of low fertility, notes the demographer Jones. For one thing, separation from their relatives in the countryside means there is little in the way of family support for taking care of children.

Jones suggests that urbanization has also undermined the traditionally family centered religious values of Chinese society. Pew Research identifies China as the least religious major country in the world, making it, even more than Europe, a paragon of atheism. All around the world, the decline of religious sentiments has been associated with low fertility around the world.

Finally the announcement’s timing may not be fortuitous. When China’s economy was booming and the future looked limitless, more families might have considered a second child. But with the economy slowing, it seems logical to expect that weak economic conditions will reduce fertility rates further, as has been the case in Japan and Taiwan.

What matters most here is what China’s decision reveals about changing attitudes on population. For the last half century, we have tended to be worried about overpopulation, particularly in Asia. And to be sure some parts of the world, notably sub-Saharan Africa still have birthrates far above their capacity to accommodate newcomers.

But it is now clear that many parts of the world — notably East Asia and Europe — face a very different demographic challenge rooted in falling fertility, diminishing workforces, and rapid aging. As British author Fred Pearce has put it, “The population ‘bomb’ is being defused over the medium and long term.”

Eliminating the one-child policy may not much change the current trajectory of China’s demography, but it marks a significant shift in the debate about population that will be with us for decades to come.

This piece first appeared at Forbes.

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

Photo by Paul Munhoven (Own work) [CC BY-SA 3.0], via Wikimedia Commons

Is California’s Bubble Bursting?

Wed, 10/28/2015 - 21:38

California has a long history of boom and bust cycles, but over the past 25 years or so, California’s cycles appear to be becoming more volatile, with increasing frequency, higher highs, and lower lows.  The fast-moving business cycle may not provide the time necessary for many people to recover from previous busts, and may be too limited in its impact. Even now, 22 of California’s 58 counties have unemployment rates of 7.5 percent or higher. Eleven California counties have unemployment rates of at least nine percent.  And these, we are told, are the best of times.

Policy behavior is predictable throughout the business cycle. 

Sacramento is awash in cash during a boom, because California’s revenues are more closely related to asset prices than economic activity.  As the economy grows, particularly in an era of ultra-low interest rates, asset prices climb faster than the economy grows, and California is flush.  Sacramento acts as if the boom will continue forever.  Spending commitments are increased, or taxes are decreased.  Politicians congratulate themselves on “fixing” the budget problem.

For Sacramento, economic busts and the resulting fiscal crisis are acts of God, completely independent of policy.  State revenues fall more rapidly than economic activity falls, because asset prices fall faster than overall economic activity. Sacramento tries to transfer the fiscal pain to local governments.  Mostly, they are successful. As of July, Local government employment was still down almost five percent from its pre-recession high, while state government employment is up about 4.5 percent over the same period.

Sacramento is currently enjoying a boom, but this boom, like all booms, will ultimately lead to a bust.  There are signs that California’s confrontation with its next bust could come soon.

Asset prices are cause for concern.  After a five-year Bull Market that saw cumulative gains of over 70 percent, the S&P is little changed this year.  Over the past 60 days, it’s been very volatile.  California’s median home price is up over 70 percent from its recession low.  It too has recently shown volatility, reflecting the huge differences between regional markets.

Housing affordability (percentage of population that could afford the median home) is down too.  It’s fallen from over 50 percent to about 30 percent.  We can’t be sure, but it’s probably below a sustainable level.  That is, below a level that can sustain a middle-class population.  Several California communities have lower levels home ownership rates, but places like Marin County have minimal middle classes.

California’s tech sector has served the state well over the past business cycle.  In quarter after quarter the Bay Area has led the state in job creation.  In many quarters, the Bay Area was the only California region to gain jobs.

But California’s tech sector can be very volatile, as the last bust in 2000 showed.  Today, venture capital investment is near the levels we saw just before tech’s big bust.  The number of deals is lower though.  It’s not clear that it is again a bubble about to bust, the possibility should be seriously considered.  Ideally, we would have a plan to deal with the subsequent fiscal challenges.

If tech does decline, the impacts will be more than fiscal.  California’s Information sector, down more than 100,000 jobs from its previous high, still has not recovered from the bust:

Recent data imply that continued economic growth, even the slow growth we’ve become accustomed to, is threatened.  California’s most recent jobs report was a big disappointment.  National data was disappointing too.  Only 20 states saw employment increases in September.

California’s position on the Pacific Rim between Asia’s manufacturing sector and the world’s largest consumer market guarantees that trade is an important sector for California.  Increasingly, however, that sector is at risk.  China’s economic growth is weakening.  Competing ports in Mexico and Canada threaten California’s trade sector, as does the Panama Canal expansion.  California’s response has been to ignore the challenges and to refuse to expand ports to accept today’s largest ships.  California’s share of North American trade will surely continue to decline:

An economic downturn would have a huge impact on California and its citizens.  California’s budget surplus is precarious, and the state has failed to make any real changes in California’s fiscal structure.  Instead of using California’s period of good fortune to reduce the budget’s vulnerability to volatile asset prices, by broadening the tax base, Sacramento has amazingly elected to increase revenue volatility by augmenting the status quo with a temporary tax.

The games that partisan politicians play leads me to the conclusion that they either don’t believe that their policies adversely affect real lives, or they don’t care.  Certainly, economic outcomes   affect real lives.  There is abundant evidence that unemployment and poverty cause drug abuse, domestic violence, broken families, poor health outcomes, and many other social pathologies.

The question, then, is do policies affect economic outcomes?  In their book Why Nations Fail, Acemoglu and Robinson compare side-by-side communities that appear identical but have different economic outcomes, cities like Nogales Arizona and Nogales Mexico.  These two cities, and the other pairs in the book, are identical, except for being in different countries.  They are adjacent to other.  They have the same resources.  They are demographically very similar.  They only differ by political regimes.   Acemoglu and Robinson find that policy decisions and the inclusiveness of the decision process have dramatic impacts on economic outcomes, and thus people’s lives.

California policy is dominated by a rich coastal elite who control most of the media, finance campaigns, rule over the universities and generally dominate all discussion.  The result is extreme inequality, persistent nation-leading poverty, high housing costs, and limited opportunity for California’s most disadvantaged populations.  And, California’s most disadvantaged will pay the most for California’s next downturn.  They won’t write checks, because they can’t.  Their net worth won’t decline, because it’s already at or below zero.  They’ll pay a far higher cost in broken homes, broken families, and broken lives.

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

The Looming Political Battle of the Ages

Tue, 10/27/2015 - 21:38

The old issues of class, race and geography may still dominate coverage of our changing political landscape, but perhaps a more compelling divide relates to generations. American politics are being shaped by two gigantic generations – the baby boomers and their offspring, the millennials – as well as smaller cohorts of Generation X, who preceded the millennials, and what has been known as the Silent Generation, who preceded the boomers.

Both the boomers and the Silents gradually have moved to the right as they have aged. Other factors underpin this trend, such as the fact that boomers are overwhelmingly white – well over 70 percent compared with roughly 58 percent for millennials. People in their 50s and 60s have seen their incomes and net worth rise while millennials have done far worse, at this stage of their lives, than previous generations.

Although millennials are more numerous than boomers, the elderly are a growing portion of the population, and they tend to vote in bigger numbers. Voters over age 65 turn out at a rate above 70 percent, while barely 40 percent of those under 25 cast ballots. That may be one factor in why this presidential campaign is dominated not by youth, but by aging figures like Donald Trump (69), Hillary Clinton (68) and Bernie Sanders (74).

The Silent Generation

Leading generational analysts – Neil Howe, Morley Winograd, Mike Hais – have suggested that the experiences people have growing up shape political beliefs throughout their lives. This does not mean that people do not change as they age, but where they started remains a key factor in determining how far these changes spread within a generation.

The now-passing Greatest Generation – the group that survived the Depression and the Second World War – were largely shaped by the experiences of the New Deal and the boom of the postwar era. This has made them consistently less conservative than successor generations, and they have retained their Democratic affiliations.

Read the entire piece at the Orange County Register.

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

Photo: driki

The Houses Americans Choose to Buy

Tue, 10/27/2015 - 05:46

The US preference for detached housing remains strong, according to the newest data just released in the 2014 American Community Survey, by the United States Census Bureau. In 2014, detached house and represented 82.4 percent of owned housing in the United States. This is   up 1.8 percentage points from the 80.6 percent registered in the 2000 census. The increase may be surprising, given the efforts of planners to steer people into higher density housing, especially apartments.

The US Situation in 2014

Among owned housing, mobile homes ranks second only to detached housing. Attached houses, which are ground oriented units with common walls, such as townhomes and semi detached homes (also called duplexes) are the third most popular form of owned housing, accounting for 5.7 percent of units in 2014. Perhaps surprisingly, the apartments planners prefer ranked fourth preference among households buying their own homes. Apartments, which include lower rise, midrise and high-rise condominiums account for 5.5 percent of owned housing. (Figure 1). The fifth, and by far the smallest category of owned housing is "Boats, RVs, Vans, Etc., which represented 0.1 percent of owned housing.

Trend Since 2000

There were approximately 4.7 million more detached houses in 2014 than in 2000. This means that 114 percent of the new owned housing stock was detached housing. Despite their second ranking among housing types, there were substantial losses in the number of mobile homes. In 2014 there were approximately 1.1 million fewer mobile homes and continuing losses could drop mobile homes below attached homes and apartments over the next decade. Mobile homes are often transitional for households aspiring to afford detached or even attached housing. Attached homes enjoyed a strong increase of approximately 410,000 units. The strong detached and attached housing increase could reflect, in part, the realization of those aspirations.

Apartments, which were within 15,000 of attached houses in 2000, dropped to approximately 270,000 behind, while adding only 160,000 owned units. In view of the strong condominium construction rates in some cities, this may be surprising. On the other hand, it could be indicative of the "dark and empty" thesis that many of the new units have been purchased for only occasional use and not as primary residences, some rented out by owners (Figure 2).

There was an 18,000 unit loss in "Boats, RVs, Vans, Etc."

Owned Housing by Metropolitan Classification

The preference for detached housing was pervasive, even in the metropolitan areas with the largest pre-World War II urban cores (identified using the City Sector Model). Nearly 71 percent of owned housing is detached in these metropolitan areas, which include New York, Los Angeles, Chicago, Philadelphia, Washington, Boston and San Francisco. The detached housing percentage rises to 85 percent in the other 46 metropolitan areas with more than 1 million population and is similar for the 53 metropolitan areas between 500,000 and 1 million population. Among the 106 metropolitan areas with more than 500,000 population, the percentage of detached housing increased in 86.

The detached housing share is a smaller 80 percent outside these largest metropolitan areas.

The defining difference between the metropolitan areas with the largest cores is in owned apartments, which represent 15 percent of owned housing. This is more than three times the rate of owned apartments in the other 46 major metropolitan areas and the 53 metropolitan areas with between 500,000 and 1,000,000 population (Figure 3).

Housing Types by Metropolitan Areas

Among the 106 metropolitan areas, 86 have detached percentages of owned housing of 80 percent or more. The highest detached housing percentage is in Omaha, at 94.8 percent. Modesto trails closely at 94.4 percent. This may not be surprising, since so many households have been driven away from close enough-for-a-long-commute San Francisco Bay Area by its exorbitant house prices and severely constrained housing choices. Detached housing is now a luxury in the Bay Area well beyond the resources of middle income households who did not buy their homes in the past, when prices were lower.

The gap between second and third is much larger, with Dayton having a detached housing percentage of 92.8 percent, followed closely by Kansas City (92.7 percent), Memphis (92.6 percent) and Wichita (92.4 percent). Stockton, at 92.3 percent has attracted so many San Francisco Bay Area residents that it is now a part of the San Francisco Bay combined statistical area ranks eighth, (Figure 4).

The lowest rates of detached owned housing are in Miami (63.8 percent), Philadelphia (63.9 percent), New York (65.4 percent), Baltimore (65.4 percent), and Honolulu (66.0 percent).

Philadelphia and Baltimore compensate substantially for their low detached housing percentage by leading in attached housing, which is widely dispersed in both the core municipalities and the suburbs. More than 30 percent of Philadelphia's owned housing is attached, and 27 percent of Baltimore's. In Washington and Allentown more than 20 percent of owned housing is also attached (Figure 5).

Honolulu has the largest percentage of owned apartment housing, at 26.6 percent. New York (24.1 percent) and Miami (23.6 percent) follow. Only two other metropolitan areas, have more than 15 percent of their owned housing in apartments, Boston and Chicago (Figure 6).

All of the metropolitan areas with the 10 highest percentages of mobile homes are in the South, with the exception of Tucson. Lakeland, Florida has by far the largest mobile on percentage, and over 20 percent. McAllen, Sarasota, Baton Rouge and Tucson complete the top five, ranging from 12.6 percent to 14.5 percent (Figure 7).

As noted above, the percentages of owned housing in the "Boats, RVs, Vans, Etc." category are much smaller. McAllen has the largest share at 1.2 percent. The top 5 is rounded out by Bakersfield, Phoenix, Portland (OR-WA) and Tucson (Figure 8).

The Detached House: Still King

Three decades ago, historian Robert Fishman wrote: "For the first time in any society, the single-family detached house was brought within the economic grasp of the majority of households" (Note). The US may have been first, but it is not alone. The same observation can be made for other nations, such as Japan, Canada, Australia, New Zealand and Norway. The detached house is alive and well in the United States and may even be increasing its domination.

Note: This quotation is from Fishman's "Bourgeois Utopias: The Rise and Fall of Suburbia" (page 183). The subtitle should not be interpreted to suggest that this is another superficial anti-suburban screed. In fact, Fishman's point can be interpreted as indicating that suburbia has been replaced by a new type of city, even less connected with the former dominant (monocentric) core.

Photo: Minneapolis-St. Paul suburbs (author)

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

How Big Government and Big Business Stick It to Small U.S. Businesses

Sun, 10/25/2015 - 06:40

From the inception of the Soviet Union, transformation was built, quite consciously, on eliminating those forces that could impede radical change. In many ways, the true enemy was not the large foreign capitalists (some of whom were welcomed from abroad to aid modernization) but the small firm, the independent property owner.

“Small scale commercial production is, every moment of every day, giving birth spontaneously to capitalism and the bourgeoisie … Wherever there is business and freedom of trade, capitalism appears,” noted the state’s founder Vladimir Lenin. He understood that while larger firms could be manipulated to serve the state, “capitalism begins in the village marketplace.”

Later on, this drive to eliminate grassroots capitalists—notably the “rich peasants” or kulaks—took on a particularly deadly form. In 1929 Stalin decided on the “liquidation of the kulaks as a class.” Millions of small rural entrepreneurs were imprisoned, murdered, or starved to death, until by the end of the ’30s independent business in the Soviet Union was largely eliminated, giving the state free rein.

Who are America’s Kulaks?

The United States, fortunately, is not the Soviet Union and even the most “transformation” oriented politician does not—at least yet—have power to create a gulag or openly appropriate the wealth or lives of citizens. Yet lately there is nevertheless a powerful trend to limit and largely disempower the country’s small business community—our kulaks—from a host of antagonists, including the Obama administration, the large financial institutions, and the ever-expanding regulatory apparat.

In the 19th century, the small farmer epitomized the national ideal: independent, hard-working, frugal and engaged in his community. Later, as agriculture’s share of the economy dropped, the “yeoman” farmer gave way to the Main Street business owner, whose conflicts, particularly in the late 19th and early 20th centuries, were more with oligopolistic corporations—notably utilities, oil companies, and railroads—than the government.

Kulaks are not just people with some money and capital. They tend to be engaged in the private sector, where risk is an everyday concern. There are other parts of the affluent middle class who are not Kulaks but actually beneficiaries of the intrusive state, such as academics, parts of big business and, of course, elite members of the ever-expanding governmental nomenklatura. These professionals, as well as corporate executives, have helped make the Democratic Party, as the New York Times’ Tom Edsall suggests, the “favorites of the rich.”

The Decline of a Class

In the ascendance during the Reagan and Clinton booms, our kulaks—the roughly 10 million businesses under 500 employees that employ 40 million people—are clearly in secular decline, with grave implications for the economy, employment, and the future of democracy.

Rather than a new age of democratic capitalism imagined by Reagan era conservatives, we increasingly live in a world dominated by large companies. The overall revenues of Fortune 500 companies have risen from 58 percent of nominal GDP in 1994 to 73 percent in 2013. At the same time, small business start-ups have declined as a portion of all business growth, from 50 percent in the early ’80s to 35 percent in 2010. Indeed, a 2014 Brookings report (PDF) revealed that 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. Only 35 percent of small business owners, according to a recent survey by the National Small Business Association, express optimism about the economy.

This decline in entrepreneurial activity marks a historic turnaround. Start up rateshave fallen for young people in particular, dropping to the lowest levels in a quarter century. At the same time the welfare state has expanded dramatically to the point that nearly half of all Americans now get payments from the federal governmentnotably through Medicare and Social Security. At the same time, the lack of grassroots economic activity may contribute to labor participation rates, now the lowest in almost four decades.

The Obama administration’s progressive-sounding rhetoricmay offend some of the thinner-skinned members of the oligarchy, but his economic policies—the bank bailouts, super-low interest rates, and growing federal power—have also improved the balance sheets of the corporate hegemons and the super-rich. In contrast, these policies do little, or less than little, for the yeoman class. Money today is made far more easily today by playing games with the market than making or selling on Main Street.

High business costs, some related to the rising tide of regulation under President Obama—including Obamacare—have become a huge burden to smaller firms. Indeed, according to a 2010 report (PDF) by the Small Business Administration, federal regulations cost firms with fewer than 20 employees more than $10,000 each year per employee, while bigger firms paid roughly $7,500 per employee. The biggest hit to small business comes in the form of environmental regulations, which cost 364 percent more per employee for small firms than it does for larger ones. Small companies spend $4,101 per employee, compared to $1,294 at medium-sized companies (20 to 499 employees) and $883 at the largest companies, to meet these requirements.

Nowhere has consolidation of power under the current regime been more obvious than in the financial sector. Goldman Sachs’ Lloyd Blankfein has described his firm as “among the biggest beneficiaries of reform.” The new regulatory environment has created huge barriers to any potential competitors and places smaller firms at a distinct disadvantage.

In contrast these regulations have hastened the rapid decline of community banks, for example, down by half since 1990, particularly hurts small businesspeople who depended on loans from these institutions, leaving them, as even Ben Bernanke admits, with major obstacles at achieving credit.

The large banks also benefited from the Obama administration’s steady refusal to prosecute any Wall Street grandees. Their get-out-of-jail-free card is a testament to the pilfering lobbyists of Washington’s K Street and the greed of politicians in both parties.

Resisting the New Duopoly: Big Government and Big Business

Under Lenin and Stalin, the threat to the kulaks was explicit, and in the end genocidal. Here in America, to be sure, the process is far less extreme. And not all the assault on Kulaks can be traced to government.

Technology and globalization often work against small firms. In the past, technology promoted competition whereas now it increasingly works to foster the consolidation of a new oligarchy dominated by such quasi-monopolies as Microsoft, Amazon, Apple, Google, and Facebook.

Indeed, the future being envisioned in the media and by the oligarchs is one dominated by automated factories and computer-empowered service industries. This will reduce opportunity for both middle-class jobs and small business in the future. To some, the American middle and working classes are becoming economically passé. Steve Case, founder of America Online, has even suggested that future labor needs can be filled not by current residents but by some 30 million immigrants. In this he reflects the cosmopolitan notions favored by the oligarchs. But likely not so much by the Kulaks and the bulk of the populace.

Rather than a republic of yeoman, we could evolve instead, as one left-wing writer put it, to live at the sufferance of our “robot overlords,” as well as those who program and manufacture them, likely using other robots to do so. The financial community seems to have little problem with this tendency, as we can see in its support for companies such as Uber, which, however convenient, is growing at the expense of what had been thousands of full time workers. And former top Obama aides are leading Uber’s defense against threatened taxi drivers.

Politicians on both the right and left seek to appeal to middle class voters and small business owners, but neither party can be said to have the interests of these groups at heart. The large corporations and banks have enjoyed an unprecedented surge in profits, but few small business have crashed that party. Republicans and their leading lobbyists generally have no interest in doing anything, such as equalizing capital gains and income rates, that would offend those who support their campaigns and fund their ongoing political activities.

In the past, Democrats may have appealed to Kulaks, but that seems to have died with the end of Bill Clinton’s second term. Whereas the first Clinton accepted limits on government largesse, the newly emboldened progressives, citing inequality, are calling for more transfers to the poorer parts of society. They even plan to hit the kulaks where they live—largely suburbia—as part of an effort to social engineer American communities.

This trend has almost universal support in the mainstream media, the campuses, and some corporations, who can better manipulate the regulatory and tax system. There is even a role model: to become like Europe. As The New York Times’ Roger Cohen suggests, we reject our traditional individualist “excess” and embrace instead continental levels of modesty, social control, and, of course, ever higher taxes.

Trump, Sanders, and the future of the Kulaks

The assault on the kulaks has had significant political consequences, although the endgame remains very much in question. Certainly there’s widespread dissatisfaction towards the Obama administration: in 2012, small business ownersranked as the least approving group for the current regime.

Yet it is not just Republicans or Tea Partiers who are upset with the rising plutocracy. Americans, according to Gallup, greatly favor small companies over big business. Indeed most large institutions—government and media as well as large corporations—now suffer some of the lowest rankings in recent history, with only small business and the military doing well.

Given these attitudes, it’s not surprising that the rising candidates of 2015 were those—Trump, Carson, Sanders , and even Fiorina—who have tried to position themselves in opposition to the status quo. The candidate most feared by Wall Street isn’t the folksy socialist Bernie Sanders but Donald Trump, whose candidacy, reports Politico, is setting off “a wave of fear” among the investor class. This is not just concern over Trump’s xenophobia, but his essential populism.

Both Trump’s support and that of Ben Carson come from Republicans who do not oppose higher taxes on the ultra-rich; they might not be far right culturally but they tend to the left on issues of economic security. These issues are critical toboomers, the group that dominates the small property owning class and the largest share of voters, and have been turning more conservative.

The kulaks may agree with Bernie Sanders on the dangers of corporate power, but they are likely no fans of redistribution. They also may suspect, rightly, that they, and not the grandees at Apple or Goldman Sachs, will be the ones to pay for the Democrats’ increasingly extravagant redistributionist demands.

Overall the kulaks do not seem impressed with candidates, such as Hillary Clinton and Jeb Bush, who are essentially creatures of dueling oligarchies. The kind of acceptance of corporate leadership that dominated Republican politics through much of the past half century is now fading, and the results are a GOP fractured not only by ideology but also by class. The big money may be on the corporate side, but there are a lot more Kulaks than grandees when it comes to voting.

In Russia, the forces of the state managed to destroy the kulaks, cementing a legacy of economic stagnation, particularly in the countryside, that remains today. America’s war on the kulaks may be less bloody-minded, but if it is not somehow halted, both our economy and the country’s intrinsic entrepreneurial spirit will fade. We may end up looking all too much like contemporary Russia, an oligarch-dominated kleptocracy that holds out increasingly little promise to its own people, and provides no real role model to the rest of the world.

This piece first appeared at The Daily Beast.

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

Photo: Main Street America Russell, Kansas by [CC BY 2.0], via Wikimedia Commons

How Urban Planning Made Motown Records Possible

Fri, 10/23/2015 - 21:38

I’m reading Once in a Great City: A Detroit Story by David Maraniss, a book I plan to review for City Journal. But I want to highlight something briefly that really caught my eye about Motown Records. It’s no secret Detroit punches above its weight in musical influence, and the Motown sound was clearly a big part of that. Maraniss asks “Why Detroit? What gave this city its unmatched creative melody?” He lays out his theory of the case with regards to Motown Records.

The family piano’s role in the music that flowed out of the residential streets of Detroit cannot be overstated. The piano, and its availability to children of the black working class and middle class, is essential to understanding what happened in that time and place, and why it happened, not just with Berry Gordy, Jr. but with so many other young black musicians who came of age there from the late forties to the early sixties. What was special then about pianos and Detroit? First, because of the auto plants and related industries, most Detroiters had steady salaries and families enjoyed a measure of disposable income they could use to listen to music in clubs and at home. Second, the economic geography of the city meant that the vast majority of residents lived in single family homes, not high-rise apartments, making it easier to deliver pianos and find room for them. And third, Detroit had the egalitarian advantage of a remarkable piano enterprise, the Grinnell Brothers Music House. [emphasis added]

Like most things, the rise of Motown Records was multifactoral. Maraniss keys in on the prevalence of pianos in black homes. Note his factors creating this, to which one could also add the first rate musical education available to public school students at places like Cass Tech that he refers to multiple times throughout the text.

But of course I highlight: “the vast majority of residents lived in single family homes, not high-rise apartments, making it easier to deliver pianos and find room for them.”

It’s no secret that Detroit, like most Midwest cities, is a city of single family homes. Detached houses have a bad rep in planning circles today, but in this case the space they afforded allowed black families to have a piano – and in Motown Records founder Berry Gordy, Jr.’s case, a baby grand at that. This would be much more difficult in a microapartment to say the least.

Let’s not get too carried away. As Gordy was founding Motown, Jane Jacobs was pointing out the trouble with Detroit’s “gray belts” of single families that were already being abandoned. Pete Saunders has highlighted Detroit’s housing stock as one of the nine key urban planning reasons Detroit failed (ironically, in part because today these houses are too small).

Nevertheless, no preponderance of single family homes, no widespread pianos in black Detroit homes, and likely no Motown Records either. The history of American music was literally shaped by the single family housing character of Detroit. If we can acknowledge its flaws, it’s only fair to acknowledge it’s unique strengths too.

What this suggests is that cities shouldn’t despair too much about their existing built form, even if in many cases they are struggling with it. The question might be, what does that form enable that you can’t get elsewhere? Grinnell Brothers Music figured out that auto money + under-served black households + single family homes meant a potential market for pianos. And the rest is history. What other market opportunities exit right before our urban planning eyes that we have not yet noticed?

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

Conferences and Progress

Thu, 10/22/2015 - 21:38

Californians attend innumerable conferences on housing and economic growth.  Year after year, in counties across California, the same people show up to say and hear the same things.  Mostly what they say and hear is naive, and nothing ever changes.

I was reminded of this when I saw a report on what appears to have been a typical conference at the Harris Ranch on Growing the Central Valley Economy.

There is no doubt that the Central Valley economy could use some economic growth.  After years of paying a disproportionate share of the costs of California’s coastal-driven energy, environmental and water regulations, the Valley’s economy is suffering.  Poverty is rampant, as California leads the nation with a three-year average poverty rate of 23.4 percent according the Census Bureau’s most recent comprehensive poverty measure.

The Valley and some other inland areas are the primary reason California leads the nation in poverty and inequality.  Throughout the Valley, economic growth is anemic.  It’s negative in some areas.  Some counties are seeing declining populations.

Conferences, at least the typical California conference, won’t help.  They only serve to provide a low-cost means to salve the participants’ consciences, allowing them to feel that they are doing something.

Consider the recommendations that came through the report:

Creative thinking from the public policy sector

You can bet your net worth that you will hear about creative thinking or thinking outside the box at every California housing or economic development conference. At best, it doesn’t mean anything. If it does mean anything, creative thinking from the public policy sector is the worst thing that could happen.

Public policy sector creative thinking is what has created the San Joaquin Valley’s stagnant economy and California’s poverty and inequality in the first place. California’s ruling elite are proud of California’s regulatory quagmire. No one could have imagined 20 years ago how successful they would be in putting it in place. Today, it remains unduplicated by any state, but Oregon is trying.

The public sector does not create jobs or wealth, although it can provide preconditions through infrastructure development or contracts. But government is not the source of innovation or wealth creation. That comes from entrepreneurs, whether in the once-dominant aerospace industry or the early days Silicon Valley’s world-leading tech sector.  It won’t create any in the future.

The best that government can do is to get out of the way of innovators—that means stream-lining the regulatory process and protecting property rights, in order to provide a predictable business environment.

Let’s hope we don’t see more creative thinking from the public policy folks.

Putting a “face” on the Valley and individual lives affected, emphasizing the continuing drought, pending fracking legislation, and burgeoning trade and logistic sectors in the seven-county region known as the San Joaquin Valley

I think the idea is that if the coastal elite could just see the impacts of their policies, they would change those policies to allow more economic vigor in the Valley. The naivety is touching, and shockingly naive.

Let’s face it, California’s coastal elite likely care more about some Minnesota dentist’s shooting a lion than they care about the lives of Valley residents. Their policies are there to save the world. If they cause some inconvenience for people in the Valley, well that’s just the cost of progress.

It might be different if they thought their policies would impact their own incomes. Their policies don’t. Tech sector people know their incomes come from all over the world, and they just relocate plants, call centers, tech support and even development outside of California if costs become too high. There is a reason that the Silicon Valley no longer is building more of the chip factories for which it was named.

The retired coastal elite’s income is mostly independent of California’s economy. Once again, the checks come from someplace else.

Accessing and employing the most effective tools from science, engineering and technology to responsibly advance technological applications

Yep, and motherhood is a wonderful thing. Technology and applications will advance, regardless of what happens in the San Joaquin Valley. How is this supposed to help the Valley? California has priced itself out of competitive tradable goods production. That’s why Intel, Apple, Facebook and others are spending billions expanding outside of California.

Technology will benefit Valley residents, but it won’t be a source of economic growth until the Valley has a competitive cost structure. And that cannot happen until the state takes its foot off the valley’s neck.

Building coalitions to ensure adequate resources and investment in the Central Valley during what is likely to be a dramatic transition period

Coalitions are another topic that comes up in every California conference. We’ve heard this for decades, and nothing has happened.

All that coalitions, at least as they materialize in California, can do is advocate. Most often, they advocate to the government. Since governments are the source of the problem and not the source of economic growth and wealth, this not an effective strategy. The coalitions might extract some wealth from someone else, but they are not going to create economic vigor.

Focusing locally on training and retaining that will help boost opportunities for employment and contribute to an improved quality of life as the region continues its transformation to a progressively more sustainable future

This is another thing you hear constantly California conferences. Education and training are something that we have chosen to do for our young people. It can be an economic development tool. In California today, though, education is not an economic development tool.

San Joaquin Valley graduates of high school or college can’t get jobs in the Valley. The Valley’s unemployment rates are way above the State’s even in good years. More individuals with degrees won’t change this. All it means is that Texas, Arizona, Utah, and other states will have a better pool of California workers to supply their economies. We may feel a moral obligation to educate, but it’s not a local economic development tool.

What Could Work?

The California Environmental Quality Act (CEQA) was originally enacted to protect California’s pristine natural environments. Since then it’s evolved into a tool which allows almost anyone to stop or delay just about any project. In fact, the threat of a CEQA case is often wielded by project opponents in order to extort concessions from companies.

CEQA dramatically increases the uncertainty and costs associated with California projects. It needs to be rewritten to achieve its original purpose while limiting its use as a tool for maintaining the status quo.

California’s other regulations that most hurt economic growth are either environmental or are designed to bring in “stakeholders .” All need to be evaluated on a cost-benefit basis.

Chapman University researchers have presented compelling evidence that California’s greenhouse gas regulations have almost no impact on global carbon levels, but we know they have considerable costs.

Regulations designed to bring in “stakeholders” effectively grant almost everyone veto power over most projects. You could hardly design a more effective method to slow or stop growth.

Politically, there is no chance of making necessary regulatory revisions anytime soon. There is hope, though. California’s minority caucus recently stopped proposed regulation mandating a 50 percent decrease in California’s use of gasoline. The minority caucus’ constituents are California’s primary regulatory victims. It was good to see them stand up for their constituents. I hope to see more of it in coming years. That will be far more effective than another conference.

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

The Candidates’ Other Demographic Challenge

Wed, 10/21/2015 - 21:38

It is massively larger than 11 million illegals.

Hans Rosling, co-founder of Gapminder, calls it “the biggest change of our time”. It is Africa’s population growth from 1 billion people today to 2.5 billion by 2050 and 4 billion by 2100.

You could say that a close “second biggest change of our time” is the aging and stagnation of the population in rich countries. The combined population of North America, Europe, Japan and Australia/New Zealand is now at 1.3 billion and it will remain at 1.3 billion by 2050 and 2100 with small gains in North America and Oceania offset by declines in Europe and Japan.

This boom and bust present an unprecedented challenge to policy makers in every country of the world. Poor countries in Africa and Asia are ill-prepared for a boom that will last for decades. And rich countries must adapt their economies to a new reality of flat or falling domestic demand. In addition, the West also faces an increased flow of migrants from Africa and the Middle East fleeing poverty or war.

If a candidate wishes to seriously address the demographic emergency, he might turn his attention to the much larger global picture, not just what happens at the US-Mexico border. Without an improvement in local conditions in Africa and Asia, millions will try to move to the West. The numbers we now see crossing the Mediterranean at great risk will pale in comparison to those of twenty or thirty years from now.

In the same week that Donald Trump announced his immigration plan, there was news that Germany could accept as many as 750,000 refugees this year. If they end up remaining in Germany, this would amount to 0.9% of the German population, a higher annual rate of immigration than the US has had in over a century. By way of comparison, the current US rate is at 1 million green cards per year, equal to 0.3% of  the US population. The post war average is 0.25% per year.

The migrant crisis is putting Europe’s openness to the test. Not all countries are as welcoming. Sweden is more open than others and has been accepting the equivalent of 1%+ of its population every year. Other countries only agree to take in very small numbers or reserve the right to be selective.

Of course, it is not as easy to move from Africa to North America. The Atlantic and Pacific Oceans will deter millions of desperate migrants who will instead try their luck with Europe.

In fact, barring the unexpected, the Western hemisphere is relatively insulated from this century’s population boom. On current UN projections, the population of North and South America will rise by a relatively modest 225 million between now and 2050, less than 10% of the entire 2.4 billion rise in world population. Nonetheless we can assume that some millions, or perhaps tens of millions, out of a few billions, will find their way across the oceans.

This chart shows the scale of the expected changes. The first bar on the left, nearly invisible, is the current population of illegal immigrants in the US, estimated at 10 to 15 million. The next one, barely visible, are the future legal immigrants into the US between today and 2050 assuming the current run rate of 1 million per year. The next four bars are the increases in populations for the US, the Western hemisphere, Africa and the world in the next 35 years.

So you can see that our domestic concerns are minute in comparison to what is happening elsewhere in the world. It is true that close proximity to a crisis creates a greater sense of urgency. A small problem next door can be more pressing than a large problem a thousand miles away.

But the rapidly changing demographics of the West, and of Africa and Asia, are already having an impact on our lives. It is right therefore to discuss the following during a political campaign:

  • Developed countries including the US, Canada, Europe, Japan, Australia, New Zealand are having fewer children than in the past. Their total fertility ratios (TFR) are below the replacement level of 2.1 average children per woman. This means that the populations of these countries are shrinking (Japan, Germany, Italy), plateauing (Europe in general) or growing slowly (North America, France, Great Britain).
  • According to the latest UN estimate, the US population will increase from 322 million today to 389 million in 2050. This projection includes future immigrants and is equivalent to an annual growth rate of 0.5%, well below the 1.2% average of the last 100 years. The post war average is also 1.2%.
  • Europe’s population will fall from 738 million to 707 million. Russia, Germany and Italy will shrink while France and the UK grow slowly.
  • Several emerging markets including China and Russia also have TFRs below replacement. China’s population will be peaking then falling. It will be surpassed by India’s within the next ten years.
  • All the above mentioned countries except India have aging populations. The median age in the United States is now 38 years and rising. In nearly all European countries, it is over 40. In Germany and Japan, it is 46. At the other end of the spectrum, in booming Nigeria, Ethiopia and Congo, it is less than 20.
  • Dependency ratios (loosely the number of dependents per worker) are rising everywhere except in Sub-Saharan Africa, India and a few other countries.
  • As noted above, the populations of Sub-Saharan Africa and of the Indian subcontinent (India, Pakistan, Bangladesh) are booming. Sub-Saharan Africa is estimated to grow from 962m today to 2.1 billion in 2050. India from 1.3 billion to 1.7 billion.
  • And the world population is expected to grow by 2.4 billion additional people by 2050. But the Western hemisphere is expected to add only 225 million, less than 10% of the projected increase.

So what is to be done?

One of Mr. Trump’s proposals is to build a wall along the Mexican border. Beyond the near term, this may or may not prove effective. Certainly, the Southern border as it stands today is one of the softest points of entry for current and future illegal immigrants.

A more comprehensive and more robust solution is to improve conditions in the migrants’ countries of origin through trade, investments in infrastructure, health care and education, and assistance in building stronger institutions. (Such an effort may fly in the face of Mr. Trump’s other promise to repatriate jobs that have been outsourced to China and other emerging markets, but that is another topic.)

Contrary to some political discourse, an investment in the economies of poor countries is not just altruism. It is a win-win strategy and an investment in our own future. Bjorn Lomborg, founder of the Copenhagen Consensus, wrote recently about investing in the health and education of children in poor countries:

It is morally right that every child should be given the best chance to survive, eat well, stay healthy, and receive an education. Now we also know that it is among the best investments we can make. Healthy, well-educated kids grow into productive adults, capable of providing a better future for their own children, creating a virtuous circle that can help build a better, more prosperous world.

Our own work at populyst centers on the development of the populyst index™ which rates each country on three measures: innovation/productivity, demographics/health care, and institutional strength/governance. In recent years, the deteriorating demographics of the West have eroded their standing in the index. And the booming demographics of poor countries have given them an opportunity to make significant strides if they can implement the needed reforms.

A symbiotic solution that addresses the challenges of both rich and poor countries would involve the following:

  • Emerging economies would benefit from western capital, technology and institutional expertise.
  • Better health care in Africa and India would lower infant mortality, improve women’s health and accelerate the fall in TFRs, curbing the big population boom.
  • Domestic demand is slackening in rich countries and would benefit from new sources of demand from rising populations. A rising standard of living in poor countries will add to the revenues of Western firms dealing with sluggish home markets.
  • An improvement in emerging economies would relieve the migrant crisis we are now seeing in the Mediterranean and Europe.

In case of inaction, the political instability and economic dislocation the world may suffer because of the ongoing population boom will touch our own country in more undesirable ways than a few million unwanted immigrants have done so far.

How do we respond to the twin problem of stagnant demographics in the West and booming demographics in poor countries? This is the question that all candidates should be debating.

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

Planning has Become the Externality: New Zealand Deputy Prime Minister

Tue, 10/20/2015 - 21:38

One of the frequently cited justifications for urban planning is to mitigate negative externalities --- detrimental impacts that people or organizations impose on others in society. While acknowledging this, New Zealand Deputy Prime Minister Bill English charged that urban planning itself has become the externality, by virtue of its impact on house prices, equality and the economy in New Zealand.

In a speech to the Victoria University Business and Investment Club in Wellington, the Deputy Prime described the government's program to reverse the decline in housing affordability  that have seen national prices relative to incomes (the median multiple) nearly triple, to 8.0, in Auckland, the largest metropolitan area. He outlined three motivations for the government's policy:

Consequences of Planning: The Economy

English said: "The first is that a housing market that is not properly functioning can have a significant effect on the macro-economy."

"Over the last five years, the Auckland housing market has been the single biggest imbalance in our macro-economic system.

The point is that when the supply of housing is relatively fixed, shocks to demand – like migration flows increasing sharply as they have recently – are absorbed through higher prices rather than the supply of more houses."

He noted the destabilizing effect of strong land use regulation:

"What they’ve [economic researchers] found is that, across different markets subject to rules which vary by state, more-intense regulation of urban development is associated with higher house price volatility.

The effects of planning rules can extend to the macro-economy.

Research indicates that when planning rules prevent workers shifting to higher-productivity locations, then there is a cost in terms of foregone GDP."

It's only relatively recently that economists and politicians have understood the scale of those effects.

So when we're talking about something as apparently dry as the Auckland Unitary Plan [metropolitan land use plan], we're talking about a set of rules that will have a major impact on the city, on current and future residents – but also on the wider economy."

Consequences of Planning: Increased Inequality

English went on to say: The second reason we focus on planning and its consequences is that poor planning drives inequality.

"Poor regulation of housing has the largest proportionate effect on the lowest quartile of housing costs and rents.

So when we're having the debate about whether there is sufficient land available, we have to recognise that the people who lose the most from getting that decision wrong – and who stand the most to gain from fixing those decisions – are those on the lowest incomes."

Housing costs are becoming a larger proportion of incomes – and that matters the most at the bottom end of incomes among people who have few choices.

The new supply of lower-priced, affordable housing has dried up.

There are parts of Auckland where no new houses are entering the market priced at the affordable end of the market.

It is not surprising to see prices and rents rising disproportionately at the bottom end given this lack of supply."

The Deputy Prime Minister also said: "Planning is often seen a public good activity that must address the needs of those who are most-vulnerable and have the lowest income," and noted:

In fact there is a strong argument to say it does exactly the opposite.

Poor planning favours "insiders" – homeowners – on high incomes and who have relatively high wealth.

In particular he mentioned strategies that drive up prices:

Those rules include urban limits [urban growth boundaries], minimum lot sizes which prevent subdivision below a certain size, and maximum site coverage rules which prevent a house covering more than a certain proportion of the lot.

Working in combination, these rules reduce opportunities to develop affordable homes.

He has particular criticism for Auckland's urban growth boundary and its impact on house prices:

"Another indicator relates to Auckland's former Metropolitan Urban Limit, now called the Rural-Urban Boundary.

A study found that the value of land just inside the urban boundary was ten times higher than the value of land just outside it.

That huge price difference around an arbitrarily-selected line on a map indicates that there are housing opportunities outside that boundary that cannot be taken because of planning restrictions.

Consequently, first home buyers trying to access the housing market are being prevented by land prices inflated by an urban boundary."

English also cited the paradox that the higher house prices driven by excessive regulation lead to additional, more expensive requirements (called "inclusive zoning" in the United States).

Now that planners are recognising these consequences, they are now creating even more rules to offset these effects; for example by requiring some developments to include up to 20 per cent affordable housing.

That is implicit recognition that planning rules have driven the costs up so much that another rule is required to offset it.

Consequences of Planning: Higher Government Costs

English said that the third motivation is the fiscal cost to Government: "The impact of these rules on inequality, and on household incomes, leads to a third reason for why the Government is focused on the housing market."

"Today we spend $2 billion each year on accommodation subsidies. 60 per cent of all rentals in New Zealand are subsidised by the Government.

The state owns around $21 billion worth of houses.

One house in every 16 in Auckland is a Housing New Zealand property."

Planning as the Externality

The Deputy Prime Minister says that planning has, in effect, abandoned its public purpose:

"For those among you who are economists, I would go so far as to say that while the justification for planning is to deal with externalities, what has actually happened is that planning in New Zealand has become the externality.

It has become a welfare-reducing activity.

And as with other externalities, such as pollution, the Government has a role to intervene, working with councils to manage the externality.

We're starting to get analysis that shows planning’s costs."

The Costs of Planning

It is not only in New Zealand that urban planning has become a negative externality. From London to Vancouver, San Francisco, Sydney and elsewhere (God forbid, even Liverpool) the land rationing strategies of urban planning policies have been associated with the losses in housing affordability, with an up to tripling of house prices relative to household incomes. These policies have lead to significant economic losses, including expanded inequality and labor market distortions. Important domestic goals shared by nations around the world, such as improving the standard of living and reducing poverty cannot be addressed efficiently or effectively in such an environment.

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

Photo: Auckland Harbour Bridge (by author)

Environmental Activists Turn up the Rhetorical Heat

Mon, 10/19/2015 - 21:38

What is the endgame of the contemporary green movement? It’s a critical question since environmentalism arguably has become the leading ideological influence in both California government and within the Obama administration. In their public pronouncements, environmental activists have been adept at portraying the green movement as reasonable, science-based and even welcoming of economic growth, often citing the much-exaggerated promise of green jobs.

The green movement’s real agenda, however, is far more radical than generally presumed, and one that former Sierra Club President Adam Werbach said is defined by a form of “misanthropic nostalgia.” This notion extends to an essential dislike for mankind and its creations. In his book “Enough,” green icon Bill McKibben claims that “meaning has been in decline for a long time, almost since the start of civilization.”

And you may have thought the Romans and ancient Chinese were onto something!

Rather than incremental change aimed at preserving and improving civilization, environmental activists are inspired by books such as “Ecotopia,” the influential 1978 novel by Berkeley author Ernest Callenbach. He portrays an independent “green” republic based around San Francisco, which pretty much bans fossil fuels and cars and imposes severe limits on childbearing. These measures are enforced by a somewhat authoritarian state.

Read the entire piece at The Orange County Register.

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

Rural Industrialization: Asia’s 21st Century Growth Frontier

Sun, 10/18/2015 - 21:38

A World Bank report released earlier this year featured a jarring statistic: 200 million people moved to East Asia’s cities between 2000 and 2010. That figure is greater than the populations of all but five of the world’s countries. Commentators argue that the urbanization of Asia is inevitable, with one calling recent growth “just the beginning.” Considered alongside figures about urban migration, the fact that only 1 percent of Asia’s land is urbanized (a popular statistic) appears to validate predictions about the increasing densification of cities. However, growth in the capacity of cities to accommodate industrial growth seems to be flattening. With a rising middle class and booming demand for automobiles, Asian cities can expect no relief from congestion, and this may be a deterrent for businesses. Rural areas are increasingly prepared to absorb this potential shift in demand.

Urbanization patterns

In examining Asia’s economic growth through urbanization patterns, it is helpful to consider historic data spanning several decades. Figure 1 compares 54 years of urbanization in Southeast Asia’s five largest economies against India and China, both arguably the 21st century’s most dynamic growth stories and frequent subjects of urbanization research and commentary. Urban population share has been rising consistently in most countries of this study. Malaysia has long seen a population majority living in cities, and China and Indonesia both crossed the 50% threshold in 2011. Thailand has also rapidly urbanized since 2000, and will likely pass 50% this year. By contrast, Vietnam, India, and the Philippines have been slower to urbanize, with the latter declining since 1990. Part of this variation reflects differences in definitions and measurements of urbanization across countries and time, but the underlying pattern remains clear: the past several decades have seen an urban migration of historic scale.

Figure 1 (Data source: World Bank)

That urbanization correlates with economic growth is a point rarely overlooked. Indeed, the two have supported one another since the emergence of capital- and labor-intensive manufacturing during the industrial revolution. Borne of historic growth patterns, this logic has been used to support predictions of continued industrial urbanization and policies that promote it. However, remote penetration of connective infrastructure – including both transportation and communications – is replacing old growth models with a new rural industrialization. The following data support this claim.

GDP and urban growth

The urban growth-GDP quotient (Figure 2) represents urban population growth divided by GDP, and is effectively a measure of how much economic activity countries are extracting from their cities. It is not an absolute measure such as GMP (gross metropolitan product). Rather, it is a measure of how changes in GDP track changes in urbanization, providing a broader look at the relative role of cities in national economies. A time horizon of nearly three decades (1985 – 2014) is chosen to capture the high growth period after market reforms in China (1979) and Vietnam (1985). The indexing approach is necessary to normalize the scale of variables for more meaningful graphical visualization, essentially “controlling” for vast differences in numeric values (e.g. the GDPs of China vs. the Philippines). It also creates a common reference point to compare longitudinal performance across countries.

Figure 2 (Data source: World Bank)

In this metric, China outperforms comparator countries with a particularly rapid increase in the quotient since 2005; it has evidently been successful deriving GDP value from urban areas. By contrast, Indonesia has seen comparatively less urban-based GDP contribution, and Thailand’s contribution has remained roughly the same since outpacing all countries between 1985 and the Asian financial crisis.

Manufacturing and urban growth

One factor underlying these differences is the type of industries contributing to GDP growth, and in particular their location patterns (rural vs. urban). An examination of manufacturing value added (MVA) is necessary to sharpen this analysis, as manufacturing is historically an urban-based activity. Cities provide labor, infrastructure, business services, and global connectivity; their importance to manufacturing is undisputed. The raw MVA numbers (Figure 3) indicate that since 2005, China has far outperformed other countries in the study, most of which showed consistent but not transformative growth. Among the latter, India boasts the lone spike in MVA, and that only recently.

Figure 3 (Data source: World Bank)

To complete the analysis, Figure 4 compares historic patterns of manufacturing growth against growth in urbanization. The indexed quotient replaces GDP (Figure 2) with MVA and can be regarded as a measure of the extent to which countries leverage urbanization to support manufacturing growth. China’s statistical dominance in previous measures vastly diminishes here. Further, growth in the ability of many remaining countries to derive MVA from cities slows after initially rapid growth.

Figure 4 (Data source: World Bank)

The notable exception is India, and this is the critical point in this analysis. India’s competitive advantage is rooted in the country’s tech sector and other higher-value added activities. From call centers to technology R&D, India has developed a defensible regional position in knowledge-based industries, which are increasingly dependent on the by-products of urbanization: an educated workforce, global talent networks, and lifestyle amenities that appeal to higher-income residents. China maintains its position at the top due in part to its particular urban-based industrialization strategy (special economic zones and decentralization reforms empowering cities). However, China’s conversion of rural agricultural land into industrial facilities is an emerging phenomenon, and the line between urban and rural is fading. For example, in many provinces (e.g. Hebei) factory parcels stand alone, surrounded by farms.

Towards rural industrialization

In Southeast Asia, as in parts of China, industrialization is not a fundamentally urban phenomenon. From the industrial estates of Thailand’s Eastern Seaboard to the suburban clusters of Vietnam and Indonesia, companies are now finding most everything they need outside of city centers. The advantages are numerous: cheaper land, lower labor costs, less congestion, and in some cases lucrative business incentives. These suburban and rural industrial clusters are even focusing on quality of life for families, looking beyond hard infrastructure to provide housing, education, and recreation facilities. Such amenities appeal to workers of all skill types, from manufacturing to research and development. As such, rural industrialization need not be only smokestacks and assembly lines; an educated workforce can be recruited if rural living standards match those of cities. This broadens the array and sophistication of industries capable of supporting a new kind of growth.

Hyper-urbanization visits significant inefficiencies on businesses, potentially making rural regions more attractive for operating. In many of Asia’s major cities, snarled traffic grinds life to a near halt and transit infrastructure has provided only modest relief. Aside from Singapore (a frequent statistical exception), Bangkok and Kuala Lumpur are leaders within Southeast Asia in developing urban rail. However, neither system offers the geographic coverage needed to loosen gridlock. Ho Chi Minh City is currently building its first metro line, but construction is delayed and completion appears to be years away. If hyper-urbanization is re-interpreted as a policy challenge rather than a sign of progress, the decentralization of industrial development can be one solution. Asia’s economic fate is not inextricably linked with the size of its cities, and fresh visions of decentralized growth are already proving their value. The potential is vast; for example, Indian Prime Minister Narendra Modi’s “digital push” and recent commitments to rural broadband represent a development path for the country’s remote regions. Technology, expertise, new funding sources, and emerging economic opportunities are ready to support the rise of rural industrialization across Asia.

Kris Hartley is a Visiting Lecturer in Economics at Vietnam National University – Ho Chi Minh City, and a PhD Candidate at the Lee Kuan Yew School of Public Policy, National University of Singapore.

Top Photo: Putrajaya, Malaysia: Seri Gemilang Bridge. Behind the bridge on the right side Ministry of Women, Family and Community and Ministry of Urban Wellbeing, Housing and Local Government © CEphoto, Uwe Aranas / , via Wikimedia Commons

Jessie: Over-The-Rhine, Cincinnati

Fri, 10/16/2015 - 21:38

This is Jessie. She’s a well educated thirty year old professional with a good income. She could live anywhere she wants. She was offered excellent positions with good companies in San Francisco. While she was excited by the opportunity to live in a top tier coastal city she was smart enough to actually run the numbers before taking a job. Her income would be comparable to what she was already making in Cincinnati, but her cost of living (particularly the astronomical cost of housing) in San Francisco meant that she would actually be accepting a massively lower standard of living in California compared to Ohio.

Cincinnati isn’t just affordable. It’s also a fabulous place to live. Ten years ago the cost of property in San Francisco was high, but still within the reach of people like Jessie. No more. And ten years ago the urban core of Cincinnati hadn’t yet revived sufficiently to reach a critical mass of livability. But today the scales are tipped decidedly in Cincinnati’s favor as San Francisco (New York, D.C, Boston, Seattle, LA, etc.) have gone off the charts in terms of cost while Cincinnati has matured and proven itself.

Last year Jessie bought this entire three family building in the Over-the Rhine neighborhood in Cincinnati for $279,000. She then spent $126,000 in renovations. So she’s in for a grand total of $405,000. She lives in the top two floors and rents two apartments on the lower levels. The rental income goes a long way to offsetting her monthly expenses. I just checked the real estate listings here in San Francisco. There’s a 300 square foot studio condo on the market for $399,999, but it will almost certainly sell for considerably more once potential buyers outbid each other. And the monthly HOA fees are ridiculous.

If you’d like a more detailed account of how older buildings in Cincinnati are being purchased and rehabbed by ordinary people, including Jessie, I encourage you to check out the “Owner Occupied OTR” episode of the Urban Cincy Podcast.

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

Techno Fixing the Urban Zone

Thu, 10/15/2015 - 21:38

In 2008, when Chicago inked a deal to privatize its parking meters, a chorus of groans ensued. To say that the deal was widely panned is putting it mildly. Its detractors say the city accepted too little in exchange for turning over the operations of its parking meters for a near-eternal 75 years to a private company that promptly raised the prices and sued the city. To many, the deal appeared desperate and irresponsible; a prime instance of a city in the red buckling to the ambitions of a private operator and getting little in return except for a pittance of one-time cash.

The case of Chicago is not unique. While several other cities have flirted with privatizing large-scale city services, politicians who support even many of the best-constructed of these measures have been rejected at the ballot box.

The argument against privatization has primarily been a financial one. In most cases, it appeared that transferring the development and management of large city networks into private hands would at best yield equally adequate services, but for a much higher price to residents, while creating a barrier to cities’ long-term flexibility. Not long ago the verdict on urban privatization read more like an epitaph. Common sense dictated that city services could best be cared for in public hands. Major movements in city management like New Urbanism’s burgeoning lean urbanism would optimize choices about government decision-making. Public-sector and populist ideas like widespread bike lanes, traffic calming design features, urban farming, and streetcars appeared the best options available for driving future city development, and as the seminal techniques for optimizing livability and resources while eliminating congestion.

The shame about the damage that the perceived failure of the Chicago deal has inflicted on the reputation of urban privatization is that few have noticed the increasingly obvious relationships between privatization, data, and city services in the period since. Many planners continue to present “livability” and “placemaking” as topics best solved through traditional planning approaches, well removed from the explosion of privately developed data technologies. While keeping their eyes on the ever-coveted fractional percentage gains in bicycle ridership in the cores of the largest cities, they’ve largely missed the more significant transformations around us. The public-sector response to the failed privatization ploys of a few years ago has in many cases been to write off privatization forever.

But today, the private sector is offering better products. The Smart Cities Week conference in Washington, DC recently highlighted some of these advances, which range from programs to optimize transit systems (in order to speed up services and reduce the need for investment in hard infrastructure), to Uber-style trash pick-up that allows private waste management companies to electronically compete over who will empty a just-filled dumpster quickest and cheapest. Far from the expensive and resource-intensive pipe dreams that many have ascribed to these kinds of technological innovations (thus writing them off as impractical for the coming post-fossil fuel economy), most of these new products seem designed to reduce inefficiencies, lower costs, and minimize resource usage through precision monitoring and optimization.

Rather than making a key fiscal offering to cities in the form of large, up-front payments in exchange for the rights to take over ordinary city services (a useful tool for paying off debt, but a tough political sell given the high consumer payments needed to make the undertaking worthwhile to the private vendor), the private sector appears to have shifted its commitment towards making the case that technological advances can generate value on both sides of the equation. While the parking vendors in the initial privatization cases were hard-pressed to prove that they were able to offer services even on par with those of the cities’ existing systems, a commitment to research and development in urban scale technology is now allowing private vendors to offer services that are overwhelmingly more user-friendly, more efficient, and more advanced than municipal services.

Because so much of the private-sector focus has been on optimizing network operations, the notion that private management is inevitably more expensive than city management is fast-becoming obsolete. The question has shifted away from whether a city that receives an up-front payment ends up with a greater rate of return than it otherwise would have, and more toward asking how much value the privatization of a service will create for the city’s residents. While up-front payments may still be juicy bait, the real meat lies in across-the-board cost savings and noticeably better service options quickly coming on line.

The answer to many of these questions seems clear. Who is going to accept coin-operated parking meters and confusing, impersonal signage instead of interactive, clear, and usable ones? Who will be satisfied with a 10-minute walk to an inefficient transit system if a self-driving car would come to his or her door for a similar price? Why would a city install conventional street lights if a private operator could more cheaply operate energy-efficient sensor-activated lighting that can simultaneously forestall crime through remote monitoring? And who wants to live in a city where conservation objectives are primarily pursued through inconvenient regulations, parking restrictions, and limits on plastic bag usage, when hyper-local smart grid technology can achieve the same savings by automatically optimizing load storage, green roofs, solar, and wind power block by block, all while lowering prices, eliminating losses, and hedging risk through variable city and local networks? Nearly all of these products are already on the market.

Once city governments and voters realize that the private sector is beginning to offer services that are more efficient, more affordable, more sustainable, and more convenient than even the best conventional optimization practices being pushed today, it’s hard to believe that they will tolerate doing without them. If the newness of such systems also helps attract millennials wooed by ever-fancier gadgetry, then the case becomes even stronger.

The blind spot the planning profession has often shown to this kind of thinking is understandable and justified. Getting a good description of a 'smart city' from the technology industry is an exercise in tooth-pulling. And who really believes that corporate technology firms can make places as livable as those planners that are dedicated to designing for livability? The private sector hasn’t helped itself with years of offerings that seemed designed to bilk bureaucrats out of public money. Luckily, the technological advances are now being paired with better, more creative, and fairer financing mechanisms.

Hesitation by planners may be a good thing, because it has forced the private sector to begin to integrate the livability principles of urban design. Past perceived failures may give cities added pause, allowing a more thoughtful merge between planning objectives and privately-developed data capabilities.

But planners best not wait too long. Popular urban advances are increasingly being forged by technologists with little input (or even sometimes with disdain) from planners. Writing off technology and divorcing big data is not a winning formula. As Silicon Valley continues to boom with large-scale, cost-effective advances, the planning profession may increasingly lose power. Enter cities designed by corporate private-sector technologists, and city budgets rescued by the ever-resilient engines of private capital.

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

Flickr photo by Mark Turnauckas: a smart parking meter in Akron, Ohio.

Oil Bust? Bah -- North Dakota Is Still Poised To Thrive

Wed, 10/14/2015 - 21:38

Oil and gas companies have the worst public image of any industry in the United States, according to Gallup. But it’s well-loved in a swathe of the U.S. from the northern Plains to the Gulf Coast, where the boom in unconventional energy production has transformed economies, enlivened cities and reversed negative demographic trends.

What now that the good times are over in the oil patch? In North Dakota, the epicenter of the once-hot Bakken shale play, the number of active rigs is down to 68 as of this week from 145 in June of 2014.

Some might argue that it’s now the turn of oil patch cities to suffer, just as they did when prices plunged back in the early 1980s, setting off a decade long decline. But many of these cities have made considerable progress in economic diversification, making themselves far more attractive places for non-energy businesses.

Perhaps no state benefited more from the energy boom than North Dakota. Long known more for its harsh weather, low population and featureless expanses than for anything positive, the massive deposits on the Bakken formation turned the state into the No. 2 energy producer in the country, trailing only Texas. The prairie state gained 45,000 energy jobs between 2007 and 2014. Now the decline in oil prices promises to eliminate quite a few of them.

But few North Dakotans seem to believe that the energy bust will turn the state once again into a poster child for stagnation. For one thing, North Dakota’s job base has also expanded well beyond oil, with a net growth of 155,000 jobs   jobs from 2007 to 2014  — no small beer in a state with a population of 739,000. This growth started well before the oil boom, with employment surging by 50,000 jobs between 2000 and 2007.

Transportation, logistics, wholesale trade and construction are among the industries that have added jobs, and the state’s technology industry has surged, doubling employment since 2009. The state’s engineer count has expanded 41% since 2009, almost seven times the national increase. Fargo, the state’s largest city but hundreds of miles from the Bakken, has thrived in large part due to the expansion in tech and business services. Overall Fargo has 38% more jobs than in 2000.

In the coming years, other industries may help pick up the slack from energy. One prime candidate is aerospace, where North Dakota is touting itself as the “Silicon Valley of drones,” an outgrowth of the conversion of the Grand Forks Airforce Base from launching bombers and tankers to drones. The country’s first drone-only business park is being built on an unused portion of the base. Other industries on the upswing include biomedicine and wind turbine parts.

Although some accounts have focused on the high costs to North Dakota communities of the oil boom, it’s difficult to find many North Dakotans who think it hasn’t been worth it. Over the past decade the state’s per capita income soared from 38th in the nation in 2004 to sixth in 2014. In this surge North Dakotans bought lots of things that once seemed unattainable, including winter homes in places like Phoenix.

Beyond The Buffalo Commons

But perhaps the biggest transition is demographic. A decade ago North Dakotans were being told by geographers like Rutgers’ Frank and Deborah Popper that their state would continue to lose residents and would best be transformed into a “buffalo commons,” a giant park that would be home largely to native Americans and the state’s varied wildlife .

Yet North Dakota has enjoyed a remarkable demographic revival. After stagnating at roughly 640,000 for 15 years between 1990 and 2005, the state’s population now stands at roughly 100,000 higher.

Once among the oldest states, it now ranks as the fourth youngest, with among the highest birthrates and the strongest in-migration per capita in the nation. More important still, the youngest residents are now much better educated, according to an analysis of Census data by Mark Schill of the Grand Forks-based Praxis Strategy group. Some 34% of North Dakotans between the ages of 25 and 34 have college degrees, and 40.8% in Fargo, well above the 31.7% rate nationally.

Critically much of the demographic recovery in North Dakota is concentrated in Fargo and other places far from the energy belt, such as Sioux Falls, Omaha and Des Moines.

Do The Plains Have A Future?

Clearly the drop in price of oil, as well as of some farm commodities, will slow the Plains’ progress. Some sectors, notably the coal industry, seem destined to shrink as the EPA clamps on tighter emissions controls. North Dakota’s now low energy costs could be undermined by such steps, eliminating one competitive advantage. Iowa, Kansas and Minnesota also rank among the states most reliant on coal for electricity.

The decline in key commodity markets could also hit the region’s resurgent manufacturing sector, which specializes in farming and earth-moving equipment; the current problems plaguing Caterpillar and are being felt across the region. The problems in key export markets, such as China and Canada, are being further exacerbated by the strong dollar.

But younger demographics and low business costs suggest that the state will remain attractive for tech and business services companies. The state’s ability to draw businesses from higher-cost coastal areas has been bolstered by strong on the ground improvements. In Fargo there has been substantial downtown development and it boasts cultural attractions and a lively restaurant scene. The same can be said for in many Plains cities, notably Oklahoma City, Des Moines and Omaha. Anyone who had visited these place a decade or two ago would likely barely recognize them.

To be sure with its tough climate and location far from the coasts, the Great Plains cities are not likely to challenge places like California or New York for leadership in media or software. But there’s an opportunity for these metro areas to grow in industries ranging from manufacturing and logistics to customer support that can sustain them until commodity prices once again begin to rise. When that happens, as they say out there, honey, bar the door.

This piece first appeared in Forbes.

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

Photo "Western North Dakota" by Aaronyoung777 - Own work. Licensed under CC BY 4.0 via Wikimedia Commons.

No Wiggle Room in Housing Market

Tue, 10/13/2015 - 21:38

The salary gap – where top-end incomes are rising faster than middle- and lower-end salaries – plays a large role in the affordability of middle-class housing along with interest rates and prices. Which factor has more influence depends on where you live and how you make your living.

Using some simplifying assumptions (20 percent down payment and a 30-year fixed-rate mortgage), today’s middle-class household increasingly cannot afford a middle-class home. Two things hurt this market: poor job outlook (impacts income) and interest rates (impacts affordability).


Salary Needed

Mortgage Rate

Salary Gap

Jobs/People Ratio

Unemployment Rate

























St Louis






















































San Antonio




























































New York City






Los Angeles






San Diego






San Francisco






Salary Gap expressed as percent of Median Salary (that is, Salary Gap = (Median Salary minus Salary Needed) divided by Median Salary); negative numbers mean the salary needed to buy the median-priced home is greater than the median salary in that city. Data on salary needed and mortgage rates from; data on median salary from Unemployment rate for August 2015 and Participation rate is 2014 annual average from

In some ways, Minneapolis is not unlike San Francisco: both enjoy relatively low levels of unemployment and low mortgage costs. Nationally, the average 30-year mortgage rate is 4.09% (for July 17, 2015). Minneapolis and San Francisco are at 3.96% and 3.95%, respectively. Compared to the national unemployment rate of 5.3%, Minneapolis is at 3.5% and San Francisco is at 4.0%. So how do we explain the difference in affordability, aside from the realtor’s rant of “location, location, location”? San Francisco has a higher jobs/population ratio than Minneapolis, but that is only part of the story. As someone once told me when I was trying to understand why the jobs/housing relationship in Orange County didn’t fit the model: “What makes you think those people have jobs?”

In other words, where a population is less dependent on the traditional economy, higher home prices may be sustainable. This occurs in areas with a concentration of rich (“high-net-worth”) individuals. Some cities, like San Francisco and New York, are also attractive to rich homebuyers from outside the US. About 5% of existing home sales in California were to buyers from China (mainland, Hong Kong and Taiwan), who spent about $12 billion on homes primarily in San Francisco, Los Angeles and San Diego. The Chinese buyers paid an average of $831,000 per home – 69% paid with all-cash. In that sense, San Francisco is more like New York. The New York metro has an unemployment rate slightly below the national average, but only 57.8% as many jobs as there are people, compared to the national average of 59.2%. Foreign buyers from Canada and Mexico – who, along with China, make up about half of all foreign home buyers in the US – tend to buy in lower-priced housing markets in Florida, Arizona and Texas. Although more units are sold to international buyers in Florida (about 21% in 2015), the higher dollar volume is in California and New York. Homebuyers from Canada spent $6.4 billion in Florida and Arizona last year while buyers from China spent a total of $12 billion in California and New York. These statistics hint at a population that is less job-dependent, less “middle-class” than the national average.

The behavior of middle-class households in the decade before the 2008 collapse confirmed what I called a “distinct shift in the paradigm governing the housing market.” In November 2004, the stock market was climbing and the Fed was raising interest rates. The combination brought out talk of a real estate bubble. If investors started moving money away from housing they would be selling houses at a time when higher mortgage interest rates would make it more difficult to find buyers. That was 2004, mind you, not 2008; there were four years of housing prosperity ahead.

Under the new paradigm, rising stock market prices are neither cause nor effect for changes in residential real estate prices. (One exception is the New York metropolitan area, where Wall Street drives home prices by virtue of its impact on employment and income.) The break in the statistical relationship between Wall Street and Main Street started around 1980. In 1979, the Federal Reserve changed their policy away from interest rate targeting. As they attempted to control the supply of money, interest rates began to swing wildly. Households put more money in real estate when they saw more uncertainty in the economy. At the time I dubbed housing “A New Kind of Gold.” It wasn’t that the prices of houses behaved the same way as gold prices but because of the shared attitude from buyers. Gold is a traditional hedge against economic uncertainty. In the 1990s, people started buying homes when other investments seemed uncertain.

Prior to 1995, the Federal Reserve kept secret their monetary policy objectives. Twenty years later, we know that they are using the federal funds rate to reach targets for the money supply. Technically, the federal funds rate is the rate at which the Federal Reserve would like banks to lend to each other (although the banks are free to charge each other whatever they want). Banks also use the federal funds rate as the basis for setting consumer interest rates, like mortgage rates. Real estate investments are sensitive to interest rate changes in very specific ways. The total impact of current events on home prices will come from the Federal Reserve, regardless of what happens in the stock market. When interest rates rise it makes expansion more expensive for businesses by raising their borrowing costs. When businesses don’t expand, neither does employment. In addition to the fact that homes with mortgages become affordable to a smaller portion of the population, the impact on jobs is another reason why rising interest rates would reduce the demand for homes.

The gap between the mean- and median-priced homes was increasing across the country before the 2008 crisis, indicating that prices at the top of the scale were rising faster than the prices of more modest homes. The return of the home price gap to pre-1995 levels could have equalized affordability for middle-class Americans if income had followed suit. In addition to the poor employment outlook, fewer and fewer people will be able to afford the higher priced homes because the gap between mean- and median-income is rising faster than the home price gap is falling.

Median and mean (average) home sales prices are for new homes sold in the U.S. where the sales price includes land. Data from Median and mean (average) salary from (Table H-13).

If the long-anticipated strengthening in the jobs market had appeared after the Great Recession, it could have made a real difference for middle-America. But so far, the employment recovery has not appeared. As weak job growth appeared in September, the previously encouraging July and August growth numbers were revised downward. The labor force participation rate declined, leaving only 59.2% of the population working. Population growth in the US is less than 1% per year but job growth is not keeping up with it.

Month 2015

Civilian Population Growth

Employment Growth













4-Month Total



Civilian Population Growth based on population estimates from, Employment Growth based on number of persons employed from

As long as the monthly payments on median-priced homes are out of reach for median-income households, demand in the middle-class housing market cannot strengthen. This is one more reason the Federal Reserve cannot afford to raise interest rates this year. That doesn’t mean that they won’t do; just that they shouldn’t – that don’t always do that smart thing.

Housing photo courtesy of

Susanne Trimbath, Ph.D. is CEO and Chief Economist of STP Advisory Services. Dr. Trimbath’s credits include appearances on national television and radio programs and the Emmy® Award nominated Bloomberg report Phantom Shares. She appears in four documentaries on the financial crisis, including Stock Shock: the Rise of Sirius XM and Collapse of Wall Street Ethicsand the newly released Wall Street Conspiracy. Dr. Trimbath was formerly Senior Research Economist at the Milken Institute. She served as Senior Advisor on United States Agency for International Development capital markets projects in Russia, Romania and Ukraine. Dr. Trimbath teaches graduate and undergraduate finance and economics.

Eco-Modernism, Meet Opportunity Urbanism

Mon, 10/12/2015 - 21:38

California has always been friendly ground for new ideas and bold proposals. That was a good thing when California’s economic and social policies encouraged middle-class opportunity, entrepreneurship, and social mobility, way back in the 1960s. But the contemporary California political elite tends to pioneer policies that endanger the spirit of opportunity that once made California great.

Fortunately, some alternative ways of thinking are emerging. An environmental policy think-tank in Oakland called The Breakthrough Institute has been pioneering a new, pro-growth environmentalism called Eco-Modernism, premised on the idea of technological decoupling. That is, it is based on the principle that by intensifying the use of resources, human needs could be met with far less material. If technologies that do more with less were to be developed, more of the environment would be allowed to flourish independent of human exploitation.

The Eco-Modernist’s answer to a problem as vast as climate change would not be to reduce emissions through cap-and-trade schemes or to put limits on the use of fossil fuels. Instead, Eco-Modernists would encourage investments in next-generation technologies capable of replacing fossil fuels. Hydroelectric and nuclear facilities have been providing such clean, carbon-free energy for decades. Eco-Modernists support government-funded construction of nuclear plants and hydroelectric systems to reduce carbon emissions and fight climate change while providing affordable energy. Technological advancement and government investment can both promote prosperity and save the environment, if used properly.

Meanwhile, a Houston-based think-tank, the Center for Opportunity Urbanism, (directed by New Geography's Southern California-based Executive Editor, Joel Kotkin, where I am a research associate) has been suggesting that urban planning and macroeconomic policy ought to be conducted with the goal of expanding opportunities for social mobility and a middle-class lifestyle. The center favors policies that maximize the availability of work and minimize the cost of living. In practice, this means promoting business and development-friendly tax, regulatory, and zoning codes, and investments in effective public infrastructure and education. The goals include removing unreasonable land and energy regulations that drive up the cost of housing and utilities, and investment in quality public education and in infrastructure.

These two philosophies offer compelling, positive alternatives to the reigning green-and-blue consensus. Their shared goal: a wealthy, high-tech society, replete with opportunities for upward mobility, leaving little environmental impact. A meld of Eco-Modernism and Opportunity Urbanism could provide a thoughtful, compelling alternative to the California’s current orthodoxy; a path that would neither stifle economic growth, nor be uncaring towards the environment or the working class.
There are at least two policy areas where the philosophies conflict, however, and if such a synthesis were to become viable, these differences would need to be addressed.

Eco-Modernism doesn't particularly support suburban sprawl, because it takes up more land than dense urban cores, while Opportunity Urbanism strongly encourages suburb formation. And Opportunity Urbanists support fossil fuel use for the indefinite future to provide cheap energy, while Eco-Modernists seek a gradual phasing-out of fossil fuels, and their replacement with nuclear energy.

There’s a fairly straightforward policy compromise evident here. Eco-Modernists ought to accept suburban sprawl as important to economic growth and opportunity, and recognize that human housing needs take up comparatively little land. Opportunity Urbanists, for their part, should accept that nuclear energy can provide more sustainable and lasting energy than fossil fuels, and that a more nuclearized power system would be healthier, provide cheaper energy, and would generally provide a better quality of life for more people than fossil fuels ever could.

If Eco-Modernists gave up their hostility to suburbia they would gain a zero-carbon nuclear platform, while Opportunity Urbanists that gave up on fossil fuels would retain an opportunity society with more advanced energy technology.

Aside from this great compromise, Eco-Modernism and Opportunity Urbanism could complement each other very well. Intensive government investments in infrastructure, technology, and education drive the economy; market principles and expanded economic opportunity distribute its fruits. This strong-government/ market-based synthesis begins to resemble the economic philosophy of Henry Clay and Abraham Lincoln, that old Whig tradition that has unfortunately left us for the time being. Perhaps these new ideas will resurrect it.

What better state to articulate new philosophies and a new synthesis based on innovation and opportunity, and put it into practice? California has always been about creating something new, and giving individuals the chance to create themselves anew. The state’s policy should reflect the state’s character. But two recent stories illustrate the lunacy that our political class substitutes for good policy.

In September, a whole raft of Governor Jerry Brown’s anti-climate change legislation was soundly defeated. The boldest of these proposals called for a 50 percent cut in petroleum usage statewide by 2030 (amended later to 2050). The agenda was clear: bring California’s carbon emissions down to lead the fight against climate change through the force of example. An earlier drama occurred in June, when the Los Angeles City Council passed, nearly unanimously, a resolution to raise L.A.’s minimum wage to $15 an hour by the year 2020. Almost immediately, the move was condemned by business leaders and policy wonks across the state and nation on the grounds that it would raise the cost of doing business and drive industries out.

This heavy-handed regulatory mode of problem-solving — a crucial component of what commentator Walter Russell Mead calls the “Blue Model” — dominates areas of California policy from water quality to food prices to pensions.

The Republican alternative isn’t much better. Out of power and lost in the wilderness since the follies of the Pete Wilson administration, California Republicans typically unload pseudo-Reaganite market-based ideas when asked significant policy questions. In the above two cases, their solutions would be don’t put restrictions on carbon emissions, and don’t raise the minimum wage. But the problems still would not be fixed.

New ideas need to be out there in response. Perhaps it's time for Eco-Modernists and Opportunity Urbanists to enter into a dialogue and establish a common policy agenda for the Golden State. The dominant Democratic Party and the floundering Republicans don’t have these ideas. Someone needs to show them the way.

Luke Phillips is a student studying International Relations at the University of Southern California. He has written for the magazine The American Interest and is a research associate at the Center for Opportunity Urbanism.

Flickr photo by Jim Bowen: Sacramento, the California Statehouse.

Light Rail in the Sun Belt is a Poor Fit

Mon, 10/12/2015 - 04:42

There is an effective lobby for building light rail, including in cities such as Houston. But why build light rail? To reduce car use? To improve mobility for low-income citizens? This certainly seems a worthwhile objective, with the thousands of core-city, low-income residents whose transit service cannot get them to most jobs in a reasonable period of time.

ut rather than accept the flackery that accompanies these projects, maybe we should focus on effectiveness, judged by ridership, and the impact of such expensive projects on the transportation of the transit-dependent.

Take the Dallas light rail system, which serves growing Dallas and Collin counties. The DART light rail system expanded its lines by approximately three quarters between 2000 and 2013, yet the number of transit commuters declined, and transit's commuting market share dropped by one-quarter. More than twice as many Dallas workers are employed at home than ride transit, and do not require the massive capital and operating subsidies of light rail.

Even the widely praised Denver system has barely moved the needle for transit ridership; before opening its massive light rail system in 1990, 4.3 percent of Denver commuters used transit to get to work.

The share did rise - by a total of 0.1 percent to 4.4 percent. Even Portland, considered the Mecca of the "smart growth" strategy, actually has seen a decrease in its transit market share, from 7.9 percent before light rail to 6.4 percent in 2013. San Diego, arguably one of the more successful light rail systems, has seen its transit market share stagnate, from 3.3 percent in 1980 before light rail to 3.2 percent in 2013.

And then there is Los Angeles, a city that was essentially built around the Pacific Electric "Red Car" system in the early 20th Century, and is the densest in the United States, more than twice as dense as Houston. Yet despite this, the regional MTA, which operates its large bus and rail system, as well as a subway, still struggles to reach its ridership record reached in 1985, when transit consisted of only buses. Despite spending over $10 billion in public funds, Los Angeles has seen ridership decline while the once-more thriving bus system has deteriorated. Nearly three quarters of all Angelenos still drive to work.

No surprise then that Houston, where the light rail system opened in 2004, has not been notably successful.

Between 2003 and 2014, Harris County's population grew 23 percent, but transit ridership decreased 12 percent, according to American Public Transportation Association data. This means that the average Houstonian took 30 percent fewer trips on the combined bus and light rail system in 2014 than on the bus only system in 2003.

Finally, in each of these cities, driving alone has increased and, with the exception of Los Angeles, more people now work at home than ride transit to work.

These results reflect stubborn historical facts. Transit works well generally in older cities with historically large downtowns built largely before the ascendency of the car. These "legacy" cities, notably New York, are hard-wired for transit and have the largest downtowns; in New York the Manhattan business districts accounts for about 20 percent of the workforce. Together these legacy cities - New York, Boston, Chicago, Philadelphia, San Francisco and Washington - account for 55 percent of all transit work trip destinations in the nation.

In contrast, most Sun Belt cities have far fewer downtown jobs. In Los Angeles, downtown amount for less than 3 percent of employment and Dallas' downtown accounts for only 2 percent of metropolitan employment. In Houston the number is only 6.4 percent.

With population and jobs concentrating in the periphery, light rail service ends up serving a geography to which relatively few commute. They have not materially increased transit's share of travel, or reduced car travel. Worse still, their intense expense on single lines (routes) has precluded greater and less costly bus expansions that could have provided neglected communities - the young, the poor, the disabled, immigrants and minorities - with access to more jobs. The performance of light rail simply has not justified the expense.

Houston and other metropolitan areas need to take advantage instead of an incipient transportation revolution. Working at home is likely to increase substantially and automated vehicles promise to increase mobility while reducing traffic congestion. Companies like Uber could offer other private-sector based solutions. Houstonians should address the needs of the 21st century city not as some wish it to be but based how things really work.

This piece first appeared in the Houston Chronicle.

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

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

Cities That Locate Art In Odd Places

Sat, 10/10/2015 - 06:25

The city sidewalk today is pretty empty, with online shopping and social media having replaced shoe leather on pavement. Restrictions in the name of safety have also become more common since 9/11. One result of these trends is a movement called Art in Odd Places : the work of artists that use public space itself as a huge, blank canvas. Orlando is the most recent city to experiment in this fashion. This month, more than fifty artists there reasserted the right to an unfettered exchange of ideas in public space, reinventing the sidewalk. It was an interesting experiment that led to some bigger questions about the relationship between public space and civic involvement.

Art in Odd Places was started by New York artist Ed Woodham in 1996 during the Cultural Olympiad in Atlanta, which coincided with the Olympics. With the media focused on sports, few recall that the Olympics is a celebration of mind and spirit, as well as of the body. Olympic cities host poets on the street reciting verses, and painters and sculptors exhibiting their pieces. Woodham struggled with officials to bring performance art to the event, and went home determined to keep the town square in its rightful place as the unfettered medium of exchange for art and ideas.

All the way through the nineties, movies and television documented sidewalks thronging with people, parks full of activity, and public plazas alive with protests or festivals. Despite popular rhetoric that accuses the car of killing public space, something different was happening. Sidewalks and plazas have continued as the arena for public encounters in our cities. They reached capacity, but as cities spread out the car had little effect on, for example, Times Square, or on any other city’s sidewalk.

Something funny started happening however; something only a few like Ed Woodham noticed. “In Atlanta, we were placed in a designated ‘free speech zone,’ which I found odd,” he commented to me while preparing for Orlando’s event. “I wondered when the city was no longer a free speech zone in its entirety.” Woodham noted, in particular, the clampdown after 9/11. Any sort of organized activity on the sidewalk was more and more regulated, in part due to a heightened sense of security.

Today the value of public space is open to debate. Nicolett Mall, a pedestrian zone in downtown Minneapolis, is hardwired into the city’s soul and is being rejuvenated. Meanwhile, New York Mayor Bill de Blasio is considering removal of the plazas in Times Square that have attracted a lively crowd and the presence of costumed characters and street performers, many of them seeking tips.

In 2013, Greensboro, North Carolina hosted Art in Odd Places, and the director of downtown Orlando’s Gallery at Avalon Island art curator Pat Greene visited. Two years later, Greene successfully co-curated the Orlando show, along with Voci Dance Director Genevieve Bernard. Between September 17th and 20th this year, Orlando became a host to dozens of artists on the street. The theme in Orlando is “Tone,” which is interpreted by each artist individually; pieces have been created around audio tones, color tones or other meanings of this word (I reviewed the work in a recent critique for the Orlando Weekly).

For example, Forrest MacDonald’s subtle water pipes, inserted next to actual storm water pipes, were sprinkled down Magnolia Avenue, with hands reaching out of the pipes to stroke tufts of grass. Nathan Selikoff fed a microphone into a computer, and then onto a giant screen, projecting an “Audiograph” that mapped the soundwaves of the city like a huge EEG.

On the more ethereal side, performance artist Masami Koshikawa created “Self Portrait as Butterfly Woman,” posing in white while an assistant invited passersby to place gold origami butterflies on her body suit. This gesture broke the barriers between strangers and the taboo of touch, and represented a sublime moment in the festival. Koshikawa eventually collected hundreds of butterflies.

Arvid Tomayko paraded up and down Magnolia Street in his “Wearable Tentacle Horn,” a suit with trumpets coming out the ends of various sleeves. And Chris Scala pulled a wire mesh camper into a parking lot and slept in it, LED lights washing over his sleeping form, in a piece entitled “X-Ray Camper”. These are only a few examples of artists using public space to make a spectacle in a traditional manner.

I visited Art in Odd Places at the height of the lunch rush on one day. A few scattered pedestrians wandered in and out of restaurants, and a preschool teacher led her little ones back to school from a library trip. The artists and their supporters comprised the largest single population group. (More people came by in the evening, according to Greene.)

In the last ten years, the number of people living in downtown Orlando has actually increased, with more and more residential housing available in and around the city’s core. What has sucked the life out of sidewalks, it turns out, isn’t the suburbs; instead, it's the tiny screen and the big screen that have occupied more and more of our lives, taking over the social space that was once reserved for the street. Casual shopping encounters, mixing social and economic activity, walking to business appointments, encounters on the once-active courthouse steps: all of this has become the archaic activity of yesteryear.

Art in Odd Places did interrupt the tiny screen focus of the average pedestrian who braved the sunny weather that day. Some of the artists deliberately sought to enter the cell phones of bystanders: Sound artist Jeff Knowlton created an app called “Sonify: Orlando” which, when downloaded, provided an acoustic narrative with sounds triggered by the immediate location. A new art form, which Knowlton describes as “locative media,” is born. And overall, Woodham, in an optimistic manner, has aroused artists in city after city to reinvent the sidewalk. In Orlando, the event was a success.

The darker issue of the regulation of the sidewalk, has, however, remained unaddressed. Woodham feels that well-meaning but overly stiff regulation has turned people out of their public space, and is working hard to reinvigorate the streets with art. Where a vacuum exists, artists often rush in, and the result reflects our contemporary culture. This type of activist art is not seeking to right a gross injustice or advocate a cause, except for that of free speech. It is spurred by open conjecture about the future use of the sidewalk, and asks pedestrians to re-invent the nature of our public space in the twenty-first century.

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.

Photos by the author: Anna McCambridge interacting with a piece of "Storm Water;" Koshikawa, right, with butterfly assistant.

Should Older Americans Live in Places Segregated from the Young?

Thu, 10/08/2015 - 21:38

Demographers frequently remind us that the United States is a rapidly aging country. From 2010 to 2040, we expect that the age-65-and-over population will more than double in size, from about 40 to 82 million. More than one in five residents will be in their later years. Reflecting our higher life expectancy, over 55% of this older group will be at least in their mid-70s.

While these numbers result in lively debates on issues such as social security or health care spending, they less often provoke discussion on where our aging population should live and why their residential choices matter.

But this growing share of older Americans will contribute to the proliferation of buildings, neighborhoods and even entire communities occupied predominantly by seniors. It may be difficult to find older and younger populations living side by side together in the same places. Is this residential segregation by age a good or a bad thing?

As an environmental gerontologist and social geographer, I have long argued that it is easier, less costly, and more beneficial and enjoyable to grow old in some places than others. The happiness of our elders is at stake. In my recent book, Aging in the Right Place, I conclude that when older people live predominantly with others their own age, there are far more benefits than costs.

Why do seniors tend to live apart from other age groups?

My focus is on the 93% of Americans age 65 and older who live in ordinary homes and apartments, and not in highly age-segregated long-term care options, such as assisted living properties, board and care, continuing care retirement communities or nursing homes. They are predominantly homeowners (about 79%), and mostly occupy older single-family dwellings.

Older Americans don’t move as often as people in other age groups. Typically, only about 2% of older homeowners and 12% of older renters move annually. Strong residential inertiaforces are in play. They are understandably reluctant to move from their familiar settings where they have strong emotional attachments and social ties. So they stay put. In the vernacular of academics, they opt to age in place.

Over time, these residential decisions result in what are referred to as “naturally occurring” age-homogeneous neighborhoods and communities. These residential enclaves of old are now found throughout our cities, suburbs and rural counties. In some locales with economies that have changed for the worse, these older concentrations are further explained by the wholesale exit of younger working populations looking for better job prospects elsewhere – leaving the senior population behind.

Even when older people decide to move, they often avoid locating near the young. The Fair Housing Amendments Act of 1988 allows certain housing providers to discriminate against families with children. Consequently, significant numbers of older people can move to these “age-qualified” places that purposely exclude younger residents. The best-known examples are those active adult communities offering golf, tennis and recreational activities catering to the hedonistic lifestyles of older Americans.

Others may opt to move to “age-targeted” subdivisions (many gated) and high-rise condominiums that developers predominantly market to aging consumers who prefer adult neighbors. Close to 25% of age-55-and-older households in the US occupy these types of planned residential settings.

Finally, another smaller group of relocating elders transition to low-rent senior apartment buildings made possible by various federally and state-funded housing programs. They move to seek relief from the intolerably high housing costs of their previous residences.

Is this a bad thing?

Those advocates who bemoan the inadequate social connections between our older and younger generations view these residential concentrations as landscapes of despair.

In their perhaps idyllic worlds, old and young generations should harmoniously live together in the same buildings and neighborhoods. Older people would care for the children and counsel the youth. The younger groups would feel safer, wiser and respectful of the old. The older group would feel fulfilled and useful in their roles of caregivers, confidants and volunteers. In question is whether these enriched social outcomes merely represent idealized visions of our pasts.

A less generous interpretation for why critics oppose these congregations of old is that they make the problems faced by an aging population more visible and thus harder to ignore.

Residents play shuffleboard at Limetree Park in Bonita Springs, Florida. Steve Nesius/Reuters

A better social life

But why should we expect older people to live among younger generations? Over the course of our lives, we typically gravitate to others who are at similar stages in life as ourselves. Consider summer camps, university dormitories, rental buildings geared to millennials or neighborhoods with lots of young families. Yet we seldom hear cries to break up and integrate these age-homogeneous residential enclaves.

In fact, studies show that when older people reside with others their age, they have more fulfilled and enjoyable lives. They do not feel stigmatized when they practice retirement-oriented lifestyles. Even the most introverted or socially inactive older adults feel less alone and isolated when surrounded with friendly, sympathetic, and helpful neighbors with shared lifestyles, experiences, and values – and yes, who offer them opportunities for intimacy and an active sex life.

Moreover, tomorrow’s technology is especially on the side of these elders. Because of online social media communications, older people can engage with younger people – as family members, friends, or as mentors – but without having to live next to what they sometimes feel are noisy babies, obnoxious adolescents, indifferent younger adults or insensitive career professionals.

Age-specific enclaves prolong independent living

Could living in these age-homogeneous places help older people avoid a nursing home stay?

Studies say yes – because here they have more opportunities to cope with their chronic health problems and impairments. Now their greater visibility as vulnerable consumers becomes a plus because both private businesses and government administrators can more easily identify and respond to their unmet needs.

These elder concentrations spawn a different mindset. The emphasis shifts from serving troubled individual consumers to serving vulnerable communities or “critical masses” of consumers.

Consider how many more clients home-care workers can assist when they are spared the traveling time and costs of reaching addresses spread over multiple suburbs or rural counties. Or recognize how much easier it is for a building management or homeowners’ association to justify the purchasing of a van to serve the transportation needs of their older residents or to establish an on-site clinic to address their health needs.

Consider also the challenges confronted by older people seeking good information about where to get help and assistance. Even in our internet age, they still mostly rely on word of mouth communications from trusted individuals. It becomes more likely that these knowledgeable individuals will be living next to them.

These enclaves of old have also been the catalyst for highly regarded resident-organizedneighborhoods known as elder villages.

Their concerned and motivated older leaders hire staff and coordinate a pool of their older residents to serve as volunteers. For an annual membership fee, the predominantly middle-income occupants in these neighborhoods receive help with their grocery shopping, meal delivery, transportation and preventive health needs. Residents also benefit from knowing which providers and vendors (like workers performing home repair) are the most reliable, and they often receive discounted prices for their goods and services. They also enjoy organized educational and recreational events enabling them to enjoy the company of other residents. Today, about such 170 villages are open and 160 are in planning stages.

A question of preference

Ageist values and practices are indeed deplorable. However, we should not view the residential separation of the old from the young as necessarily harmful and discriminatory but rather as celebrating the preferences of older Americans and nurturing their ability to live happy, dignified, healthy and autonomous lives. Living with their age-peers helps these older occupants compensate for other downsides in their places of residence and in particular presents opportunities for both private and public sector solutions.

Tihs piece was first published by The Conversation.

Stephen M. Golant, Ph.D, a gerontologist and geographer, is now a Professor in the Department of Geography at the University of Florida. Previously, he was a faculty member in the Committee on Human Development and in the Department of Geography at the University of Chicago. Dr. Golant has been conducting research on the housing, mobility, transportation, and long-term care needs of older adult populations for most of his academic career. He is a Fellow of the Gerontological Society of America and a Fulbright Senior Scholar award recipient. He earlier served as a consultant to the Congressionally appointed Commission on Affordable Housing and Health Facility Needs for Seniors in the 21st Century (Seniors Commission). He has written or edited about 140 papers and books. His latest book is Aging in the Right Place (Health Professions Press, 2015).

Laed photo by Steve Nesius/Reuters.

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