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When our urban pundit class speaks of the future of cities, we are offered glittering images of London, New York, Singapore, or Shanghai. In reality, the future for most of the world’s megacities—places with more than 10 million people—may look more like Dhaka, Mumbai, or Kinshasa: dirty, poverty- and disease-ridden, and environmentally disastrous.
The globalization of cities and their elites often comes at the expense of many of the people who live there. Forced to compete with foreign capital and immigrant workers, native-born residents of cities from Los Angeles and London to Singapore often feel displaced, becoming strangers in what they thought was their own place.
In ways not seen since the Gilded Age of the late nineteenth century, America is becoming a nation of increasingly sharply divided classes. Joel Kotkin’s The New Class Conflict breaks down these new divisions for the first time, focusing on the ascendency of two classes: the tech Oligarchy, based in Silicon Valley; and the Clerisy, which includes much of the nation’s policy, media, and academic elites.
The Proleterianization of the Middle Class
From early in its history, the United States rested on the notion of a large class of small proprietors and owners. “The small landholders,” Jefferson wrote to his fellow Virginian James Madison, “are the most precious part of a state.” To both Jefferson and Madison, both the widespread dispersion of property and limits on its concentration—“the possession of different degrees and kinds of property”—were necessary in a functioning republic.
If California is to change course and again become a place of opportunity, the impetus is likely to come not from the perennially shrinking Republican Party but from working-class and middle-class Democrats.
In the coming election, we will hear much, particularly from progressives, about inequality, poverty and racism. We already can see this in the pages of mainstream media, with increased calls for reparations for African-Americans, legalizing undocumented immigrants and a higher minimum wage.
America, seen either from here or from abroad, doesn’t look so good these days. The country that maintained world peace for decades now “leads by behind,” or not at all. You don’t have to have nostalgia for George W. Bush’s foreign policy to wish for someone in the White House who at least belongs in the same room with the likes of Vladimir Putin. Some wags now suggest that President Barack Obama has exceeded Jimmy Carter in foreign policy incompetence – Carter certainly was more effective in the Middle East.
America’s Opportunity City: Lots of New Jobs and a Low Cost of Living Make Houston a Middle-class Magnet
David Wolff and David Hightower are driving down the partially completed Grand Parkway around Houston. The vast road, when completed, will add a third freeway loop around this booming, 600-square-mile Texas metropolis. Urban aesthetes on the ocean coasts tend to have a low opinion of the flat Texas landscape—and of Houston, in particular, which they see as a little slice of Hades: a hot, humid, and featureless expanse of flood-prone grassland, punctuated only by drab office towers and suburban tract houses.
Ever since the publication this spring of Thomas Piketty’s book “Capital in the 21st Century,” conservatives and much of the business press, such as the Financial Times, have been on a jihad to discredit the author and his findings about increased income inequality in Western societies. Some have even equated growing attacks on inequality with anti-Semitism, with at least one Silicon Valley venture capitalist, Tom Perkins, comparing anti-inequality campaigners to Nazis.
What if they gave a recovery, and the middle class were never invited? Well, that’s an experiment we are running now, and, even with the recent strengthening of the jobs market, it’s not looking very good.
Over the last five years, Wall Street and the investor class have been on a bull run, but the economy has been, at best, torpid for the vast majority of the population. Despite blather about our “democratic capitalism,” stock ownership is increasingly concentrated with the wealthy as the middle class retrenches. The big returns that hedge funds, real estate trusts or venture capitalist receive are simply outside the reach of the vast majority.
When we think about American finance, the default image is of a pinstriped banker on Wall Street. But increasingly financial services is shifting away from the traditional bastions of money.
In an analysis of recent and longer-term employment trends, we have identified the large cities –those with over 450,000 jobs – that are gaining jobs in financial services, a sector that employs 7.9 million people nationwide. Overwhelmingly, the fastest growth has been in cities not associated with high finance, but largely low-cost Sun Belt cities, which account for seven of the top 10 large metro areas on our list.
David Peebles works in a glass tower across from Houston’s Galleria mall, a cathedral of consumption, but his attention is focused on the city’s highly industrialized ship channel 30 miles away. “Houston is the Chicago of this era,” says Peebles, who runs the Texas office of Odebrecht, a $45 billion engineering firm based in Brazil. “In the sixties you had to go to Chicago, Cleveland and Detroit. Now Houston is the place for new industry.”
I’ve been friends with Charlie Sena for almost two decades. Charlie, a longtime entrepreneur, Democratic political operative and fundraiser for former Gov. Gray Davis, recently chided me about what he sees as my “negativity” about California and its future. My response was that, given its natural advantages, this region should not be in such a weakened condition. Decline, I suggest, is not an imperative here, but largely a choice.
California’s dream is shrinking inexorably, and only radical steps can prevent the condition from becoming permanent. Compared with previous economic expansions, fewer state residents and communities are benefiting from this recovery, which has largely been restricted to the small coastal zone surrounding the Bay Area, as well as certain parts of western Los Angeles, Orange and San Diego counties.
In virtually every regional economic or demographic analysis that I conduct for Forbes, Rust Belt metro areas tend to do very poorly. But there’s a way that they could improve, based in large part on the soaring cost of living in the elite regions of California and the Northeast. And one of the rustiest of them appears to be capitalizing on the opportunity already: that perpetual media punching bag, Cleveland.
In the town of Verona on the rural fringes of Madison, Wisc., there’s a Google-like campus that houses one of the country’s most rapidly growing tech companies, and one of the least well known. Founded in 1979, the medical software maker Epic has grown to employ 6,800 people, most of whom work at its 5.5 million-square-foot headquarters complex, which sprawls over 800 acres of what was farmland until the early 1990s.