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Small Cities Rankings – 2009 New Geography Best Cities for Job Growth

2009 Size Rank	Area	2009 Weighted INDEX	2008 Nonfarm Emplymt (1000s)	Size 2009	Size Movement	Overall Rank 2009
1	Odessa, TX	100.0	64.8	S	3	1
2	Grand Junction, CO	92.4	66.5	S	7	2
3	Longview, TX	90.0	98.4	S	8	3
4	Houma-Bayou Cane-Thibodaux, LA	88.0	97.8	S	18	4
5	Killeen-Temple-Fort Hood, TX	87.9	128.4	S	34	5
6	Laredo, TX	87.1	91.3	S	27	8
7	Athens-Clarke County, GA	85.0	86.2	S	36	11
8	Kennewick-Pasco-Richland, WA	84.7	93.7	S	8	12
9	Morgantown, WV	84.5	63.4	S	6	13
10	Fargo, ND-MN	83.9	122.4	S	18	15
11	College Station-Bryan, TX	83.5	96.3	S	76	16
12	Coeur d’Alene, ID	83.0	55.8	S	-9	17
13	Bismarck, ND	82.8	61.0	S	17	18
14	Alexandria, LA	81.7	67.0	S	52	21
15	Cheyenne, WY	80.8	44.9	S	6	24
16	Olympia, WA	80.1	103.3	S	4	25
17	Sioux Falls, SD	79.9	135.6	S	12	26
18	Greeley, CO	78.8	82.5	S	0	28
19	Tyler, TX	78.7	96.3	S	34	29
20	Las Cruces, NM	78.0	69.4	S	26	31
21	Joplin, MO	73.1	80.9	S	31	41
22	Fayetteville, NC	73.1	129.0	S	12	42
23	Texarkana, TX-Texarkana, AR	73.0	58.4	S	62	43
24	Greenville, NC	72.4	77.2	S	-14	45
25	Fort Collins-Loveland, CO	72.3	136.6	S	6	46
26	Midland, TX	72.0	71.3	S	-25	47
27	Gainesville, GA	71.1	76.9	S	-14	48
28	Auburn-Opelika, AL	71.1	54.3	S	-23	49
29	Columbia, MO	70.7	93.4	S	36	51
30	Lynchburg, VA	70.5	109.3	S	8	52
31	Dubuque, IA	70.4	55.4	S	28	53
32	Iowa City, IA	69.8	90.9	S	10	56
33	Warner Robins, GA	69.4	58.0	S	-16	57
34	Rapid City, SD	69.4	60.3	S	62	59
35	Amarillo, TX	69.4	113.2	S	32	60
36	Wilmington, NC	69.1	142.7	S	-30	61
37	St. Joseph, MO-KS	68.5	58.9	S	-12	63
38	Rochester-Dover, NH-ME NECTA	68.2	58.5	S	11	64
39	Santa Fe, NM	68.2	65.0	S	6	66
40	Billings, MT	68.0	79.3	S	-17	67
41	Brownsville-Harlingen, TX	67.8	125.3	S	34	68
42	Grand Forks, ND-MN	67.2	54.8	S	14	70
43	Lubbock, TX	66.7	131.1	S	77	74
44	Bellingham, WA	66.6	84.1	S	-30	75
45	Cedar Rapids, IA	66.4	138.7	S	37	77
46	Pueblo, CO	66.2	58.4	S	-6	78
47	Sioux City, IA-NE-SD	65.8	76.5	S	77	80
48	Valdosta, GA	65.6	56.5	S	10	82
49	Champaign-Urbana, IL	65.6	116.3	S	84	83
50	Lafayette, IN	64.9	96.6	S	94	85
51	Abilene, TX	64.7	68.1	S	6	86
52	Fort Smith, AR-OK	64.2	124.3	S	2	87
53	Charlottesville, VA	63.8	100.5	S	-26	89
54	Ithaca, NY	63.8	64.7	S	36	90
55	Pascagoula, MS	63.0	58.6	S	-19	93
56	St. Cloud, MN	61.8	102.0	S	-8	96
57	Bowling Green, KY	61.8	61.4	S	-45	97
58	Oshkosh-Neenah, WI	61.5	93.9	S	71	98
59	Hattiesburg, MS	61.4	60.6	S	-22	99
60	Waco, TX	60.4	107.6	S	-13	103
61	Topeka, KS	60.1	111.7	S	69	104
62	State College, PA	59.3	74.2	S	21	108
63	Rochester, MN	58.8	106.0	S	23	110
64	Flagstaff, AZ	58.8	63.5	S	4	111
65	Tuscaloosa, AL	58.8	96.8	S	-14	112
66	La Crosse, WI-MN	57.2	74.7	S	51	115
67	Bloomington-Normal, IL	56.5	91.8	S	51	117
68	Lake Charles, LA	55.9	92.8	S	25	119
69	Spartanburg, SC	55.8	128.0	S	58	120
70	Springfield, IL	55.6	111.9	S	71	122
71	Waterloo-Cedar Falls, IA	55.6	90.0	S	35	124
72	St. George, UT	55.3	50.7	S	-70	126
73	Manchester, NH NECTA	55.1	101.6	S	15	128
74	Gainesville, FL	54.1	134.9	S	-3	131
75	Visalia-Porterville, CA	53.7	112.0	S	-1	133
76	Eau Claire, WI	53.3	82.3	S	-3	135
77	Yakima, WA	53.3	77.5	S	2	136
78	Wheeling, WV-OH	53.2	68.2	S	78	138
79	Jefferson City, MO	53.1	79.5	S	12	139
80	Florence-Muscle Shoals, AL	52.9	56.0	S	-80	140
81	Glens Falls, NY	52.7	52.8	S	-11	141
82	Blacksburg-Christiansburg-Radford, VA	52.3	71.9	S	75	143
83	Portsmouth, NH-ME NECTA	51.5	54.5	S	-14	146
84	Macon, GA	51.4	101.3	S	69	147
85	Erie, PA	50.6	132.2	S	37	149
86	Panama City-Lynn Haven-Panama City Beach, FL	50.6	73.1	S	-60	150
87	Johnstown, PA	49.7	61.5	S	25	155
88	Decatur, IL	49.5	54.8	S	20	156
89	Huntington-Ashland, WV-KY-OH	49.4	119.6	S	5	157
90	Utica-Rome, NY	48.4	132.6	S	44	163
91	Binghamton, NY	48.2	114.1	S	30	165
92	Bend, OR	47.6	66.3	S	-85	170
93	Nashua, NH-MA NECTA Division	47.5	132.5	S	14	171
94	San Luis Obispo-Paso Robles, CA	47.4	102.2	S	-14	172
95	Duluth, MN-WI	47.4	131.3	S	9	173
96	Florence, SC	47.0	87.5	S	-64	175
97	Bangor, ME NECTA	46.1	66.2	S	38	181
98	Kingsport-Bristol-Bristol, TN-VA	45.9	121.7	S	48	183
99	Salinas, CA	45.6	126.9	S	12	185
100	Haverhill-North Andover-Amesbury, MA-NH NECTA Division	45.3	76.6	S	26	187
101	Napa, CA	45.3	62.4	S	-2	189
102	Parkersburg-Marietta-Vienna, WV-OH	44.8	72.8	S	-1	193
103	Merced, CA	44.2	57.2	S	-27	198
104	Bloomington, IN	43.4	83.5	S	9	201
105	Sheboygan, WI	42.6	62.5	S	32	205
106	Wichita Falls, TX	42.4	61.2	S	-3	209
107	Vineland-Millville-Bridgeton, NJ	42.4	61.7	S	47	210
108	Johnson City, TN	42.4	80.4	S	2	211
109	Decatur, AL	41.7	57.4	S	-54	213
110	Jackson, TN	41.7	60.6	S	-15	214
111	Anniston-Oxford, AL	41.7	52.1	S	-13	215
112	Ocala, FL	41.5	101.2	S	-77	220
113	Columbus, GA-AL	41.2	120.0	S	34	224
114	Norwich-New London, CT-RI NECTA	41.2	133.6	S	11	226
115	New Bedford, MA NECTA	40.6	65.4	S	43	229
116	Myrtle Beach-North Myrtle Beach-Conway, SC	40.6	112.5	S	-108	230
117	Dover, DE	40.5	64.1	S	-45	231
118	Appleton, WI	39.9	116.1	S	-2	232
119	Barnstable Town, MA NECTA	39.1	93.7	S	32	238
120	Lowell-Billerica-Chelmsford, MA-NH NECTA Division	39.0	117.3	S	19	239
121	Monroe, LA	38.2	78.3	S	40	243
122	Bremerton-Silverdale, WA	37.9	83.8	S	-59	246
123	Hagerstown-Martinsburg, MD-WV	37.6	100.1	S	5	247
124	Medford, OR	37.6	81.4	S	-80	248
125	Harrisonburg, VA	37.5	62.8	S	-63	249
126	Springfield, OH	37.5	52.0	S	43	250
127	Salisbury, MD	37.5	54.2	S	-46	251
128	Prescott, AZ	37.3	58.7	S	-109	252
129	Niles-Benton Harbor, MI	36.5	63.0	S	2	257
130	Racine, WI	36.4	79.0	S	25	259
131	Albany, GA	36.2	63.4	S	11	260
132	Peabody, MA NECTA Division	36.1	99.8	S	30	261
133	Clarksville, TN-KY	36.0	82.3	S	-56	263
134	South Bend-Mishawaka, IN-MI	35.2	142.1	S	14	264
135	Chico, CA	34.9	73.5	S	-35	265
136	Yuma, AZ	34.9	52.1	S	-112	266
137	Santa Cruz-Watsonville, CA	34.8	91.8	S	-77	267
138	Altoona, PA	34.8	61.1	S	-19	268
139	Gulfport-Biloxi, MS	34.3	107.6	S	-75	270
140	Dothan, AL	34.3	61.0	S	-79	271
141	Danbury, CT NECTA	33.9	68.6	S	-26	275
142	Missoula, MT	33.9	54.7	S	-53	276
143	Wausau, WI	32.8	70.9	S	-11	278
144	Kingston, NY	32.4	62.3	S	-1	281
145	Fort Walton Beach-Crestview-Destin, FL	31.9	80.6	S	-48	282
146	Burlington, NC	30.9	59.3	S	-68	286
147	Terre Haute, IN	30.8	72.7	S	19	287
148	Mansfield, OH	30.5	56.5	S	22	288
149	Muncie, IN	30.3	52.9	S	16	289
150	Port St. Lucie, FL	30.2	124.8	S	-100	290
151	Brockton-Bridgewater-Easton, MA NECTA Division	29.4	87.1	S	-28	292
152	Williamsport, PA	29.4	52.7	S	-2	293
153	Vallejo-Fairfield, CA	29.1	122.5	S	-1	295
154	Naples-Marco Island, FL	28.5	124.0	S	-45	298
155	Winchester, VA-WV	28.5	54.8	S	-114	299
156	Burlington-South Burlington, VT NECTA	28.2	111.2	S	-20	300
157	Kalamazoo-Portage, MI	27.3	141.6	S	-8	303
158	Atlantic City-Hammonton, NJ	26.9	144.3	S	5	305
159	Rocky Mount, NC	25.0	63.4	S	-45	307
160	Lima, OH	24.4	54.0	S	8	308
161	Lake Havasu City-Kingman, AZ	23.3	48.9	S	-77	315
162	Janesville, WI	22.2	66.3	S	-70	316
163	Waterbury, CT NECTA	22.0	66.2	S	-18	317
164	Anderson, SC	21.2	61.2	S	-26	320
165	Holland-Grand Haven, MI	20.1	107.8	S	-1	324
166	Muskegon-Norton Shores, MI	18.9	61.9	S	-7	326
167	Redding, CA	16.9	60.6	S	-62	328
168	Elkhart-Goshen, IN	16.3	111.7	S	-66	329
169	Dalton, GA	14.1	71.6	S	-9	330
170	Battle Creek, MI	12.2	56.6	S	3	331
171	Flint, MI	10.4	139.3	S	0	333
172	Saginaw-Saginaw Township North, MI	9.5	85.2	S	0	334
173	Jackson, MI	4.7	55.9	S	-6	336

April 14, 2009

Michigration Revisited

Only a few months ago, I admonished Michigan for its hysteria about brain drain. Given the recent news coverage concerning the exodus from the recession-plagued state, you might expect I’m ready to eat some crow. On the contrary, I’m here to report that Michigan has learned nothing from its past mistakes.

Richard Herman, an advocate for increasing rates of immigration to the Rust Belt, posts on his blog the same critique I have aired about how Michigan addresses its talent crisis:

However, the current focus on “brain drain” as the source of the problem misses the real issue.

While no doubt the Midwest economy is causing college grads who might otherwise want to stay home to leave, in an ever more mobile society, moving out is a natural part of people’s lives. Indeed, if you read the typical account of how the elite global knowledge worker lives, you often hear about people flitting from place to place to place chasing opportunity.

The real problem is not that too many people are leaving, but rather that too few are coming. It isn’t an outflow problem, it’s an inflow problem.

The former urban industrial powerhouses of the United States all suffer from the same malaise. Every city is fixated on its local labor pool, asking institutions of education to staff the “factory.” The great irony is that economic growth doesn’t happen without immigration or domestic in-migration. There is no story of a great metropolis that successfully barred its people from leaving.

The tortured metaphor for brain drain stems from private enterprise. But even in the arena of human resources, the concept of churn isn’t an anathema:

The purpose of this article is to open your mind about the silliness of measuring only aggregate turnover. I can think of no better indication of a so-called expert’s lack of true understanding of employee turnover than when I read an article or a book on retention and the author invariably expounds on the need to keep everyone.

The burgeoning narrative is that churn benefits both employee and employer. The same is true for resident and state. Fear of the outsider prevents all parties from making a rational choice and improving human welfare.

Michigan should embrace its out-migration and aggressively seek new residents. I further recommend any reference to “retention” be abolished from official policy. Where, and how many, graduates go is largely immaterial. Instead of Cool Cities to keep Michigan talent instate; what would it take to get the next generation of engineers from Colorado schools or Asia to move to the Rust Belt?

April 13, 2009

Mayor Daley Offers Tips on Fighting Corruption

Is this a story from the Onion? No. Too Implausible. The Chicago Tribune reports:

Coming from as far away as Azerbaijan, dozens of corporate executives and government bureaucrats gathered at a downtown hotel Wednesday to hear Mayor Richard Daley share his tips for preventing corruption.

Absent from his speech at the international event was any talk of city hiring fraud, the Hired Truck program or the myriad other scandals that put Daley aides in federal prison or left them free pending appeals of official misconduct convictions.

In 2005, The Chicago Sun-Times explained “From an exhaustive Hired Truck investigation to a probe into patronage hiring at City Hall, there’s so much corruption to investigate in the Chicago area, the FBI is adding manpower.” Chicago got a third public corruption squad while New York and L.A. only had two. The Hired Truck scandal was one of the biggest in recent history, where private trucking companies were paid to do nothing. Mayor Daley has yet to explain why a Chicago Mob bookmaker was running the program.

But, it’s not only Hired Truck. Mayor Daley’s Water Department was described by the Justice Department as a racketeering enterprise for at least 10 years. Just a week ago,the Chicago Democratic Machine’s own Rod Blagojevich was indicted for running a racketeering scheme even before he took office as Governor.

Blagojevich earned the early endorsement of the Machine in 2001. The Daily Herald reported powerful Alderman Burke’s glowing endorsement, “I am with Rod 100% because he has what it takes to win – money, message and an army of supporters.”

Mayor Daley’s son and nephew have just hired a prominent criminal lawyer for their questionable business dealings with the city of Chicago.

Mayor Daley isn’t the only Chicago Democrat lecturing audiences about ethics. Recently, Illinois Supreme Court Justice Anne Burke(wife of Alderman Ed Burke) lectured Illinois state workers on “Ethics in the Workplace” at University of Illinois-Chicago.Anne Burke has been accused by a top FBI informant of corruption.

Since 1971, 31 Chicago Aldermen have been convicted of felonies. Sometimes you just have to laugh. Or cry.

April 9, 2009

Slumdog Entrepreneurship: Entrepreneurship Holds Key for India’s Slums

The stealth Oscar winner Slumdog Millionaire, the Indian fable of love, heartbreak and overcoming the odds set against the backdrop of one of the world’s biggest urban slums has won fans all over the advanced industrial world – but may be less popular in India.

One Indian film director who viewed the film at the Toronto Film Festival said flatly “All the Indian[s] hated it. The West loves to see us as a wasteland, filled with horror stories of exploitation and degradation.” One viewer in India claimed the film’s makers simply “cashed in on starvation, genocide, child prostitution, and overwhelming oppression.” Famed novelist Salman Rushdie panned the movie to an audience at Emory University after it won the Best Picture Academy Award for piling on “impossibility onto impossibility” to arrive at a contrived and implausible conclusion.

The plot line — an “uneducated” slum dweller winning a million dollars on India’s version of the hit program “Who Wants to Be A Millioniare” — may well be unrealistic, but also obscures an important, often misunderstood point: the slums, themselves a product of heavy-handed land regulation and price controls, are centers of entrepreneurial activity and social stability.

India’s urban slums are not just teeming masses of exploitation and degradation. The slums are populated by people that have real jobs and earn real income. They include white-collar workers, policemen, and even bureaucrats. They include tanneries, restaurants, makeshift pharmacies, tailors, cleaners, and hundreds of other micro businesses and entrepreneurs. Peeking inside one of those huts, typically less than the size of an American child’s bedroom, one will often find a small TV, radio or DVD player, purchased with legitimate income, although powered by illegal taps into the city electrical wires.

The denizens of these slums are “quality of life poor, not cash poor,” as one World Bank official told me on a tour through Dharavi, perhaps the world’s largest urban slum. And this is where the story of Jamal, an orphan raised in the poverty, exploitation and harsh realities of India’s slums, tells a gripping story about India containing important lessons for the rest of the world.

Unlike a generation ago, a smart orphan boy now can grow up and get a respectable job. If he (and increasingly she) is clever enough, he can run a business and even become rich. Unfortunately, this story is missing from Slumdog Millionaire.

Upward mobility is not the first thing that comes to mind flying into Mumbai, India. The hills and gullies are thick with tin and wood shacks, sheltering thousands of men, women, and children. Many slum dwellers are recent immigrants from India’s hinterlands, but some have lived in these shacks for generations. Even an air-conditioned limo can’t keep the bracing poverty away from westerners ferried into the center of India’s most economically vibrant economic capital.

Indeed, as soon as I left Mumbai’s airport in a local taxi, I was struck by the destitute poverty all around me. It was a visual reminder of the stories my grandmother used to tell of her travels to India as a tourist. She loved this nation and its people, but also recognized the dirt, grime, and poverty.

But it would be a mistake to dismiss these areas as a “wasteland.”

The slums also reflect what’s going on right in India in addition to the challenges that great nation still faces.

Unfortunately, by ignoring the economic dynamism within an illegal city of one million people, the movie missed out on telling India’s truly remarkable story of growth and development.

Many have heard the story of software giants like Infosys, the 1.5 billion dollar information technology business founded in 1981, or about the scores of U.S. and European firms investing in India. Microsoft not too long ago announced plans to invest $1.7 billion in India and create 3,000 new jobs over four years.

But the real test of India’s economic rebound lies in the small business community, especially the ones that find their way in the mainstream economy. These small businesses, popping up spontaneously to meet global needs and demand, are the ones that will eventually determine whether India will become the next Asian Tiger.

Deepak Parekh is the CEO of Sureprep of India and former senior accountant for a multinational corporation. Sureprep prepares U.S. personal income tax returns, processing more than 25,000 each year. Business is booming, and Parekh anticipates annual growth of 40 percent or more.

“We did a pilot project in 2000,” Mr. Parekh says as he recalls the initial stages of the company’s founding. After all, why should an Indian firm prepare tax returns for Americans? U.S. trained accountants would seem to have a natural comparative advantage. Not so. “We looked hard at the quality numbers,” he says. “We found that Indians were among the top performers and dedicated workers, willing to work 24-7 to get the job done.” American accountants made more errors on average than Indians, but were paid more and expected more time off. Sureprep now employs more than 200 Indian accountants and software engineers.

Sureprep’s success — and that of India’s service sector — came about in part, oddly enough, due to socialism. Once the poster child for post-World War II socialism in the developing world, India erected one of the most regulated and protected economies in the world.

Yet this legacy did not impact much of the technology sector – which largely did not exist at the time of Independence — or the largely informal sector that thrives in places like Mumbai’s slums.

Dharavi, located north of the central business district and east of the airport, squeezes 900,000 people on just 2 square kilometers. That’s ten times more dense than Manhattan. By most estimates, more than half of Bombay’s population lives in ramshackle slums such as Dharavi.

Yet economic opportunity is thriving in India’s cities. The slums are large enough to have economies internal to themselves — maids, clothing repair, plastic recycling. Few are homeless.

The lack of housing is evidence of a significant planning failure. Ramakrishan Nallathiga, a housing economist in Bombay, studied land use and regulation in the city’s 20 wards and found density restrictions were the strictest in the most dense parts of the city. This forced non-profit organizations to step in and build the housing themselves after securing special land development privileges from the local government where they could. However, most of the poor scramble for any sliver of land they can find to put together a makeshift home. Since private land is off limits, they settle on public land — parks, open space, railroad right of way.

Meanwhile, Bombay’s population has skyrocketed 137% since 1975 to 17.1 million according to the United Nations. It’s now about the size of the New York urban area, but Bombay squeezes its metropolitan population onto about 8 percent of the space according to Demographia.com.

The New York area only grew by 15 percent over the same period. The only U.S. metropolitan area among our top ten that grew near Bombay’s rate over the same period was Atlanta (188%). Miami and Houston, next in line in terms of growth, merely doubled their populations. In each of these cases, though, the metro population is less than one-third Mumbai’s.

India has a lot further to go in areas other than housing as well. Many traditional industries are still shackled by labor rules that limit their ability to adapt. A World Bank analysis of the business environment found that managers reported spending 16 percent of their time with the bureaucracy in India compared to just 5 percent in Latin American countries and about 10 percent in post-Communist Eastern European countries.

India’s economic future fundamentally lies in the entrepreneurial attitude of its citizens. A recent popular movie called Swapes, or “Foreign Land,” follows Mohan Bhargava, a young, talented Indian project manager for NASA who returns to rural India to build a hydroelectric power plant that provides electricity reliably 24-7. He uses the technology he developed and uses everyday to build critical infrastructure in some of the most remote areas of his native land. Our bright, talented Indian hero has the knowledge, brains, and technology to build a company in his homeland and compete with the big boys. And India’s making it a better and better place to do that everyday. And more and more Indians are willing to move back to their homeland to take advantage of these opportunities.

Of course, India still has a long way to go. The Economic Freedom Index of the World published by the Frasier Institute in Canada still ranks India a paltry 67th. To move they will need to change in labor laws to weaken the power of the unions, continue efforts at tax reform, make India even more friendly to foreign investment while reducing regulation much, much more.

With these changes, Mumbai could become the next Hong Kong or Shanghai. The hardy and remarkably able denizens of Mumbai’s slums do not need Western pity. On the contrary, they need the freedom to build their own lives and fashion economic opportunity out of little more than hard work and a clever turn at a business.

Westerners need to scratch beyond the surface of the films and superficial criticism. They need to see the real stories of heartbreak, innovation, and perseverance that make these harsh and unbending slums potential incubators of economic dynamism — reflecting the very optimism that made Slumdog Millionaire such an attractive film.

Samuel R. Staley, Ph.D. is director of urban policy at Reason Foundation (www.reason.org) and co-author of Mobility First: A New Vision for Transportation in a Globally Competitive Twenty-first Century (Rowman & Littlefield, 2008).

April 7, 2009

Baby Boomers: The Generation That Lost America

Tom Brokaw named our parents The Greatest Generation. They came of age during The Great Depression and defeated Fascism, Nazism and Communism. They built the Interstate Highway System and landed a man on the moon. They built the great American middle class with safe communities and public schools that were the envy of the world. They deserve the title of The Greatest Generation. One of their few criticisms is that they spoiled us boomers, adhering to the teaching of Dr. Benjamin Spock.

I am 59 years old and a child of perhaps the most indulged and impatient generation in history. I fear we may also become known as the generation that lost the American Dream. The Baby Boomers have rejected personal responsibility and exhibited a lack of mental discipline that could have enormous implications for the future.

The United States House of Representatives, now overwhelmingly controlled by the Boomers, signed a $787 billion legislative “stimulus” package comprised of 1,071 pages and a hefty 8 pounds. Not one legislator read the bill before signing it. Months later, the same House members publicly screamed at the corrupt executives of AIG who received bonuses in 2008 – bonuses specifically allowed in the very legislation they passed without reading.

This abandonment of personal responsibilities by the Lost Generation took on historic significance on January 20, 1993. That’s when the first President Bush, a member of the Greatest Generation, was replaced with President William Jefferson Clinton, the first Baby-Boomer to reach the Presidency. The Clinton presidency was notorious for its personal indulgence – and not just by introducing oral sex to the Oval Office. During Clinton’s watch, 100,000 Islamic terrorists were trained in camps in Afghanistan while terrorist strikes against American interests went unanswered. Clinton failed to respond to the attack on the USS Cole that killed 17 servicemen. Our enemies grew emboldened believing that America did not take their deadly threats seriously. On September 11th 2,996 American civilians died in part because the government did not see its first priority to be protecting them.

Also under President Clinton, the Federal Government in 1999 relaxed Fannie Mae and Freddie Mac’s requirements of home mortgages. The decades old formula of 20% down and a 30 year fixed mortgage that allowed the Greatest Generation to lift home ownership to more than 60% was replaced with an array of instruments including sub-prime loans, “no-doc” applications where income was not verified, and teaser rates of 1%. Such tinkering led to unqualified purchasers with 100% financing pushing home values up at 20% per year. The bubble burst in 2007 with disastrous consequences. The heads of Fannie Mae and Freddie Mac made tens of millions in annual salary. Despite the calamitous consequences of their stewardship, no one was fired.

Another Boomer, George W. Bush followed Clinton and continued the Lost Generation’s abdication of personal responsibility. He also failed to comprehend the extremist Islamic threat. Again, no one was fired. On December 12, 2002, George Tenet, fellow Baby-Boomer and Director of the CIA assured President Bush the case that Saddam Hussein had weapons of mass destruction was a “slam dunk”. President Bush authorized the invasion of a sovereign nation based on that intelligence. No weapons of mass destruction were found. America’s soldiers inherited a broken country and hundreds of billions of responsibilities. No one, including George Tenet, lost their job. In fact, on December 14, 2004, President Bush awarded Tenet the Presidential Medal of Freedom.

On August 29, 2005, Hurricane Katrina slammed into Louisiana and Mississippi as a Category 3 hurricane. The result was catastrophic. The levees were breached and 1,836 Americans lost their lives. Americans watched in horror as police abandoned their positions, and the National Guard struggled to protect the trapped citizens who could not evacuate. Dead bodies lay uncollected in the streets. No one will forget the scene of 60,000 American refugees at the Louisiana Superdome without food, water or medical care for days. On national television, President Bush proclaimed, “Brownie, you’re doing a heck of a job.” Although three days later, FEMA Director, Michael D. Brown was forced to resign, no one else at FEMA was fired.

In July 2008, gasoline prices hit a national average of more than $4.00 per gallon as demand outstripped supply pushing oil to $147 barrel. The Lost Generation howled in protest at the oil companies who were profiting from the pain of American citizens. This came as no surprise. The environmental movement had stopped production on both nuclear power plants and gasoline refineries. Congress banned oil exploration off America’s coastline. Congress decided that ANWAR, a barren strip of coastal Alaska the size of Logan Airport in Boston, was off-limits to oil exploration. At $147 barrel, the Western economies were shipping more than $1 trillion dollars per year to the Persian Gulf to nations whose interests were simply not aligned with ours. Once again, our elected officials, dominated by boomers, abdicated their responsibility to keep America safe. Their inaction allowed our nation to become even more vulnerable to the oil weapon.

In 1973, under President Carter, when the OPEC nations first used oil as a political weapon, America imported 30% of its daily oil quota. Yet not a word is mentioned by the Lost Generation expanding American production of oil to reduce this dependency. Yes, they talk of wind and solar energy – which collectively generate less than one percent of our energy – but no one has yet figured out how to power a car with wind or solar energy. After falling to $30 a barrel, oil has slowly crept back up over $50 a barrel – in a deep recession. When the recovery arrives, does anyone believe oil will not return to $100 barrel? Yet the Lost Generation sleeps with no energy policy in place and once again abdicates its responsibilities to a future generation.

The same is true of Social Security. The Baby-Boomers are retiring now. The system is broken and there are not enough workers to make the transfers to the retirees. Do you hear anyone in Washington raising the red flag of warning? Once again, the Lost Generation has abdicated its responsibilities and kicked the can down the road.

In the waning months of the Bush Administration, Treasury Secretary Paulson informed Congress that a $700 billion bail-out of the financial sector was needed to avoid a melt-down of our banking system. TARP, the Troubled Asset Relief Program was passed by the Congress in a matter of days. Only $350 billion was committed, banks were forced to accept TARP funds, and little of those funds made their way to acquire troubled assets. GM and Chrysler received $17 billion even though they had no “troubled assets.” Another $8 billion went to Sheik Mohammed in Dubai. He had no troubled assets either, and $1.6 billion was paid out in bank bonuses. AIG received $165 billion of TARP money and paid out $286 million in bonuses. No one in Congress anticipated the AIG bonuses when they signed the legislation that specifically allowed the payments. It does not end there.

Franklin Raines, chief executive of Fannie Mae received $91.1 million in compensation from 1998 to 2004. In 1998, Fannie Mae stock was $75 per share. Today, Fannie Mae shares are worth 67 cents. Mr. Raines was not fired – he was simply hired as an economic advisor to President Elect Obama. Raines recently settled a civil lawsuit alleging fraud and stock manipulation for $31.4 million.

Postmaster General John Potter received compensation of $800,000 in 2008 while the United States Post Office lost $2.8 billion. It is possible his $135,000 bonus was based on future performance. The USPS is projected to loss $6 billion in 2009. Postmaster Potter did not lose his job either.

Our congressional representatives earn $174,000 per year for this fiscal oversight. Their congressional staff earns another $1.3 million per year plus too many perks to mention like free cars, airfare, and postage stamps.

The very things that we took for granted as children of the Greatest Generation are now challenged. Home values have fallen dramatically. Our retirement accounts have been decimated. Our public schools are not working. Traditional allies no longer stand with America. Not surprisingly, most Americans fear their children will not be better off. The approval numbers for Congress are at an all-time low. Despite the vast number of problems facing our country in 2009, when Congress passed a Continuing Resolution in March 2009, it contained 8,500 earmarks of pork barrel spending confirming that this Congress is going to maintain business as usual.

Dr. Spock wrote that our parents should not spank us and they should always bolster our self-esteem. That misguided advice led to the today’s climate of political correctness where the ideal of self-esteem outweighs the importance of performance, success or accomplishment.

Consequently, the Lost Generation measures itself by its good intentions rather than by its accomplishments. Its good intentions led to policies that prohibited oil exploration off the coastlines. The result was $4.00 gasoline. Its good intentions of teaching all children in their native tongue was a good idea but the cost to do so weakened the overall education system in America. Its good intentions of helping poor families buy homes led to the sub-prime mess that has cost American families trillions in lost equity. In the last twelve months, under the dominant control of the Baby-Boom generation, America has witnessed $11 trillion of home and stock equities disappear.

The Baby-Boomer’s move into retirement comes none too soon. Let the boomers in Congress retire at 65. We’ll even let them retire on the fat retirement plans they voted for themselves. But let’s get rid of them. The next generation can’t do much worse.

Robert J. Cristiano Ph.D. has more than 25 years experience in real estate development in Southern California. He is a resident of Newport Beach, CA.

April 5, 2009

London Calling: Bad News For Home Buyers

The demand for housing in London has outstripped supply since the post-war period, making housing unaffordable to a majority of the city’s low and middle-income families. And although the house price growth of the last two decades has reversed itself recently, it is far from clear that London’s housing problems are in any way diminished. The opportunities for first-time buyers to get into the game may be worse than at any time in recent decades.

In some ways, the London housing market is unique. The buy-to-let market is almost entirely dominated by private individuals, rather than by big investment funds. For instance, in 2006, two-thirds of the buyers of new private homes in the city were mostly small investors, and the remaining were owner-occupiers. Over half of the buyers are UK-nationals; the rest are of foreign origin. Overseas buyers have been attracted by the idea of holding investments in Sterling, a currency historically seen as stable and appreciating. For instance, South Africans have been enthusiastic investors in London housing as a hedge against the Rand. The city is made up of 3 million dwellings, most of which were built before the 2nd World War, and so the market is almost entirely for second-hand property . In fact, newly built housing in any year constitutes less than half a percent of total stock in London.

The city is also unusual in that most Londoners are 20 to 39 year-olds. The city’s in-migrants tend to be young, while out-migrants are likely to be older. As a result, not only has the number of households been growing faster than the overall population, but the average size of the household has been falling. The supply of three or more bedroom-flats has shrunk rapidly as a proportion of total supply; it fell to 14% in 2007-08, less than half the level 10 years ago. The supply of new one and two bedroom flats, however, has mushroomed over the same period. This trend is set to continue: of the 570,000 to 710,000 additional households that London will have by 2026, three quarters will be single person households.

Initial evidence that sub-prime mortgages were defaulting in greater and greater numbers in the United States in February’07 did not seem to have an impact on the UK housing market up until November of that year. The following months witnessed the crash of house prices, which continued their free fall into the final quarter of 2008. According to the Department of Communities and Local Government, properties in the UK lost a record 11.5% of their value over the year ending January’09, although the rate of house price deflation eased slightly in the last quarter. In London, house prices fell by 16% over the same period (the average house price in Greater London is 53% above the UK average).

Prior to that, the United Kingdom enjoyed a major house price boom for a decade. Growth was fueled primarily by low interest rates, which kept the costs of mortgage finance low, and by shortages in the property market. Financial deregulation and the entry of banks into the mortgage market in the 1980s and 90s meant increased competition and easy availability of mortgage finance. Add to this stable and growing employment in the city, rising incomes and expectations that interest rates would remain low, and the house price boom was hardly surprising. The boom meant that housing became increasingly unaffordable for Londoners.

But even the recent recession-related fall in house prices and the slump in sales have not necessarily translated into better opportunities to get a foot on to the housing ladder. On the contrary, the current credit crunch is compounding the problem. Falls in house prices in recent months have been accompanied by tightening of mortgage access criteria. Even if a mortgage can be obtained, average deposits and payments remain much higher than average incomes. The average first-time buyer needed to borrow 3.27 times their average income (joint or individual) in 2008, as compared to an income multiplier of 2.42 in 2000, or 2.31 in 1990. Research also shows that Londoners are increasingly dependent on help from family, since deposits can be prohibitive.

Recent analysis by the Royal Institute of Chartered Surveyors concludes that despite falling prices, London has seen the largest deterioration in housing market accessibility of any region, as would-be-buyers struggle to find deposits or secure affordable mortgages. Indeed, the volume of first-time buyers was 55% lower in August’08 as compared to a year ago, and it seems that in recent months they have been shut out of the housing market in growing numbers. A quarter fewer first time buyers are accessing the market now than at the bottom of the housing market crisis in the early 1990s, and levels are at their lowest for 30 years.

Although 80% of the housing in the UK is sold on the private market, the government plays an important role by intervening in the market through the provision of social housing, provided through housing associations or registered social landlords. There has been a dramatic surge in the demand for social housing as the recession has started to bite: the housing waiting lists have grown. According to the National Housing Federation, an additional 80,000 are expected to lack a home owing to recession-related repossessions and unemployment.

However, there are a few encouraging signs. According to government figures published in December’08, the number of new homes being constructed in London did not fall as much as one might have expected as a result of the credit crunch. This is heartening, seeing that house builders have been hit by lower prices, restricted demand, severe problems accessing credit and rising construction costs.

And surprisingly, according to primelocation.com, house prices in four of the five prime areas in London actually rose in February’09. Central London (3.24%) and West/South-West London (2.84%) saw the highest increase, although prices for property outside of London continued to free fall. The reasons for the rise could be a recent jump in sales. The investor interest pick up might be the result of yields on property rental looking attractive compared to record-low interest rates.

Rising rents, falling house prices and a potential glut of unsold new market homes can also provide an improved investment opportunity to larger institutions. In his Economic Recovery Plan, announced in December’08, the Mayor of London, Boris Johnson, put aside GBP 5 billion to be channeled into increasing the stock of affordable housing. The funds are also targeted at Londoners who are threatened with repossession, and to help would-be first-time buyers become home owners.

For the time being, the private rental sector has absorbed the re-directed demand from the housing market, as more people delay buying a home in the current climate of uncertainty. Rents in London have been strong, in some cases even rising over the last few months, especially in the face of diminishing supply of buy-to-let housing. And although the change in average price from Feb-March’09 for central boroughs in London was positive, some of the outlying London boroughs continued to experience falling house prices. Since movements in house prices in London tend to anticipate those across the United Kingdom, these changes provide an indication of what the rest of the country may expect very soon.

Megha Mukim is currently reading for a PhD at the London School of Economics. Prior to this she was a visiting fellow at the MacMillan Center for International and Area Studies at Yale University.

April 1, 2009

While Fixing Housing, Fix the Regulations

Everyone knows that subprime mortgages lie at the root of our current financial crisis. Lenders originated too many of them, they were securitized amidst an increasingly complex credit market, and the bubble popped. The rest is painful history.

Most commentators have explained the source of the problem by pointing either to faulty federal housing policies – such as Fannie Mae’s affordable housing goals, the Fed’s easy money practices, and the Community Reinvestment Act – or to the imprudent zest for gain among investors who miscalculated risk and kept up the demand for bad mortgages. Both views are correct to varying degrees. These perceptions will shape the ongoing policy debate about needed reforms.

But as this debate advances, we should not lose sight of another consequential, yet mundane, factor in the crisis: the way that regulations raised house prices and created conditions ripe for subprime loans. Regulations may be one of the least debated contributors to the current crisis, and yet their effect on the middle class’s ability to buy homes may arguably have been a key reason why subprime loans flourished in the first place.

In the heated housing market before 2007, a median income family in the U.S. could only afford 40 percent of homes for sale across the country, compared to more than two-thirds of homes in 1997. Banks got creative and helped ordinary families buy overly expensive homes with risky mortgages. In a hot market, the risks seemed low. People never should have purchased homes they could not afford, but at the same time, rising prices were putting homeownership out of the reach of ordinary families such that unconventional loans seemed a convenient solution.

Why were housing prices rising so rapidly? Observers have traditionally held that land scarcity drives up prices by preventing supply from meeting demand. But the more likely answer is that regulations on housing overly constricted supply in many parts of the U.S. Through the groundbreaking work of Wendell Cox at Demographia and scholars such as Ed Glaeser at Harvard and Joe Gyourko at the University of Pennsylvania, we have come to see that rules and regulations drive up housing prices much more than we had originally thought. Blaming supply problems on land scarcity has been a convenient excuse for too long for those who see hyper-regulation of housing as a good thing.

Regulations often limit the number of housing units that can be built on a given lot, or they restrict the number of new home permits that can be issued in a given municipality, making supply a function of rules, not land scarcity. Restrictions to the property itself, such as environmental or design requirements, also raise the cost of construction (see Andres Duany’s thoughtful article on this issue here.).

Increased regulation on housing has been a quiet, but disquieting, trend. For example, Glaeser has shown that only 50 percent of communities in greater Boston had restrictions on subdivisions in 1975, compared to nearly 100 percent today. Housing prices in the Boston area would have been between 23 and 36 percent lower on the eve of the crisis were it not for burdensome restrictions on housing. While the Boston area’s regulatory impulse may be excessive, it is nonetheless emblematic of a national trend. A recent U.S. Department of Housing and Urban Development has found that more than 90 percent of the subdivisions in a recent national study now have excessive restrictions.

According to Harvard’s housing research center, the growing cost of regulations has edged smaller builders out of the construction market and increased the market share of the nation’s ten largest builders from 10 to 25 percent since the early 1990s. This doesn’t mean that the larger builders are happy about restrictions. Bob Toll, president of one of the nation’s largest builders, has said that his company quit building “starter homes” for young families years ago because the margins on small homes grew too narrow due to excessive regulations.

How big is the problem? Most observers have typically agreed that housing regulations account for 15 to 35 percent of a median-priced home in the U.S. These percentages come from a 1991 federal housing commission, and they are likely to have increased considerably since then. If we conservatively use them to calculate the scope of regulations by the time the housing crisis began in earnest in 2007, they suggest that regulations accounted for between $35,850 and $83,650 of a median-priced home. Using the National Association of Homebuilders’ methodology for determining the impact of price increases on home affordability, we can say that regulatory restrictions priced at least 7 million – and as many as 18 million – families out of their local housing markets in 2007. As we have learned, families priced out of their markets still purchased homes – usually with unconventional, risky mortgages.

Of course, not all housing regulations are bad, and zero regulation would introduce unnecessary risks to homeowners. But the increasing rate of regulation in the U.S. represents one of the nation’s larger assaults on the middle class that defenders of “working families” rarely talk about. Conservatives avoid the issue for federalism reasons, since any effective restraint on land-use planners will likely require the federal government’s involvement. And liberals hide from an honest debate about the effects of regulations for fear that it will derail their environmental agenda that relies up on regulations to limit the kind of housing most people want – such as single family homes.

Now that there is an over-supply of housing in the U.S., the problem of housing regulations may seem moot. But if we do nothing about this issue, it will trip us up again in the future. While I served in the George W. Bush White House between 2005 and 2007, economists inside and outside the administration offered mixed – and sometimes completely contradictory – assessments of what was happening in the housing sector. We continued to work on our proposed reforms of Fannie and Freddie and the Federal Housing Administration in an effort to reduce the “systemic risk” but approached it more as a theoretical matter than as a perceived, impending crisis. We even had a HUD-based initiative on reducing regulatory barriers that quietly lumbered along but which we never elevated as a major policy issue. We now know that what we were grossly underestimating the scope of a potential crisis. We should have made housing sector reform a front burner issue.

That is all behind us now, and we can see much more clearly what led to the crisis. We need to look at how rule-makers have for too long been making housing unnecessarily expensive for ordinary families. There is a limit to what the federal government can and should do about local housing regulations, but options exist for President Obama and Congress to consider.

First of all, just as federal agencies are legally required to analyze the environmental impact of new regulations, Congress could require federal agencies to demonstrate the impact of new federal regulations on the cost of home construction. Federal agencies already have the personnel required for the task, and such a requirement would cost the taxpayer nothing extra. Second, Congress should consider new incentives in existing federal law, from highway construction to affordable housing, that would prompt states and municipalities to reduce burdensome regulations in exchange for federal resources. Third, President Obama could issue an executive order requiring federal agencies to amend regulations that have a negative effect on home construction costs. He could also use the same order to establish a task force whose job would be to identify the chief price-increasing regulations in use around the country to inform the legislative process.

If we ignore the problem, as the housing market recovers, regulations will once again make housing more expensive than it should be. Unconventional mortgages will no longer be available due to the current crisis, and we will be back in a familiar debate about “affordable housing” in which the federal government is called upon to subsidize housing that others have made too expensive. In other words we return to the status quo in which we once again increase the role of a government that – under both Republican and Democratic administrations – has gotten ever bigger, more expensive and increasingly intrusive.

Ryan Streeter is Senior Fellow at the London-based Legatum Institute and former special assistant to President George W. Bush for domestic policy.

March 27, 2009

Rust Belt Outliers

What kind of migration patterns will emerge as a result of the current economic downturn? The recession is uneven; some places are much worse off than others. Those differences can give labor cause to move. Economic geographer Edward Glaeser thinks cities with marginal manufacturing legacies should attract a lot of people because the well-educated, living in dense urban environments, should get through the crisis relatively unscathed. If Glaeser is correct, then shrinking Rust Belt cities can expect more of the same even after the recovery begins in earnest. Pittsburgh brains should continue to drain.

Ironically, the latest US Census data indicate that the population decline in the Rust Belt is slowing as a result of less out-migration. A contracting economy has, according to demographer William Frey, helped to stop the bleeding from cities such as “Buffalo, N.Y., Pittsburgh and Cleveland.” One of the cited factors for decreasing geographic mobility is the collapse of the real estate market. Job seekers are stuck in their current place of residence.

Another pressure to stay put is the economic climate of typical Sun Belt destinations such as Charlotte, NC or Phoenix. Unemployment there might be much worse than what you are seeing in your current location. There is no reason to move because the situation is bad everywhere. The “pull” factors have all but disappeared.

Of course, evaporating home equity and massive layoffs throughout the country are not mutually exclusive. These two forces could be working in concert to stem the tide from struggling Rust Belt cities and the explanation of the waning migration is quite reasonable. But I’m not so sure it makes sense in the case of Pittsburgh.

During the mortgage meltdown, the Pittsburgh real estate market has remained remarkably resilient. While foreclosures have decimated Cleveland, Pittsburgh’s prudent financial industry stayed away from bad loans. Pittsburgh is now rated as one of the most stable real estate markets in the entire country. Home ownership isn’t holding back the out-migration of Pittsburghers.

As for unemployment, the job market is much better in the Pittsburgh region than it is in Charlotte, NC. That’s why solvent financial institutions in Southwestern Pennsylvania are advertising employment opportunities in Pittsburgh South (a.k.a. Charlotte). For those with the ability to relocate, Pittsburgh has a much better job market than Charlotte.

But if we are talking about Pittsburgh out-migration, we should mention Washington, DC, the #1 destination for those seeking better opportunities than they can find near home. Charlotte is pretty far down that list. Sun Belt economic distress is causing Pittsburghers not to migrate as much to the sunbelt, thus pinpointing the reason for the dramatically falling (from the 2005 peak) net out-migration. In contrast, DC is still a viable job market, with numbers trending towards population gains.

Are more people moving to Pittsburgh? Few seem to consider the possibility. Perhaps William Frey has access to out-migration data that aren’t public, which is why he lumped Pittsburgh in with Cleveland and Buffalo. But less out-migration doesn’t mean that there isn’t more in-migration. Pittsburgh attracting more talent from other regions would be news.

Despite the manufacturing legacy that Glaeser details, there are Rust Belt cities that have bucked the population trends. Chattanooga, historically an industrial river city much like Pittsburgh, has begun to grow again after decades of shrinking. Pittsburgh isn’t necessarily doomed to being a shadow of its former self and may well separate even more than it already has from the Rust Belt pack.

Staying with Glaeser’s observations, the economic geography of Pittsburgh might help us understand why migration fueled growth is possible. Manufacturing cities tend to lack a critical mass of highly educated talent and economic activity is less concentrated. Among Midwestern cities, Pittsburgh’s gains in college attainment since 1970 “have been the most rapid.” Pittsburgh’s human capital assets are much improved. And despite the obvious sprawl, Pittsburgh also enjoys considerable economic density. Its college corridor is just five-miles long, connecting downtown with the University of Pittsburgh and Carnegie Mellon University. Internationally renowned research universities are located in close proximity to the central business district.

Might the above assets translate into greater in-migration? Perhaps, but the odds are against it. However, something unusual is going on in Pittsburgh. Whether or not that will inform job growth and economic development remains to be seen.

Read Jim Russell’s Rust Belt writings at Burgh Diaspora.

March 26, 2009

Christopher Zurcher’s Profile on NewGeography.com

March 23, 2009

Is Germany the Planners’ Valhalla?

Urban planners and anti-sprawl advocates point to Germany as a wonderland of appropriate land use. It is true that Germany has been better at preserving open space between former villages; the non-stop development that seems continuous throughout most of the United States cannot be found here.

However, this triumph of planning has also come at a cost, in terms of affordability, and has kept a large percentage of the population from being able to own their own home. Germany is expensive because of forced scarcity of land and an extremely unproductive building industry, with certain peculiarities of German culture creating additional costs.

The reasons for the lack of productivity in the German housing industry stretch back to land holding patterns in the Middle Ages, when the southern and western provinces of Germany were divided into countless small duchies and bishoprics. These small holdings stayed in the families for generations and prevented the consolidation of plots. The large plots common in America are all but impossible to find, depriving the building industry of the economies of scale possible in most of America. This in turns negatively affects the cost of housing, pushing home prices higher than they need be.

There are also the vested interests of those who have bought into the German Dream and do not want to see their homes lose value. The German Statistics Agency issued a report stating that the average home in Germany is worth 6.1 times the average income. According to demographia.com anything above 3.0 is expensive.

Blame can be placed on two factors. The first is that the productivity of German builders is far lower than that of American builders. KB homes can produce a house for about $400 per square meter and the cheapest German builders charge $1,300 per square meter (both prices do not include the price of land). A recent New York Times article stated that a passive house filled with expensive high-tech gadgetry only costs about 9% more than a standard German house. No wonder, when a standard German house costs 300% more than an average American house. Not all European countries have such high building costs; the Dutch are actually able to build housing stock at American prices; the problem in the Netherlands is the enormous costs associated with clawing a country from the North Sea. Nevertheless, Dutch builders are able to more easily assemble large plots of land on the reclaimed islands.

Choices in building materials also play a role. Germans tend to prefer heavy and expensive concrete and brick construction over wood and steel-framed houses. A lot of Germans travelling to the US invariably will express their shock at how flimsy many American houses seem. Many Germans want to have a basement as well, even though the winters are more than mild enough here to allow for simple concrete slabs. The preference for basements and solid construction have a lot to do with owning a building that will not burn down in an incendiary bomb attack and a basement for the family to hide out in should the apocalypse come again.

The collective trauma of the twentieth century lives on in the contemporary German psyche. Germans have learned their lesson from history and many of them are genuinely ashamed of it. The threat of imminent destruction was only recently lifted: up until 1989 the allied defense plans put the first line of real resistance on the Rhine, meaning that the entire country would have probably been flattened before the Allies could stop the forward thrust of the Red Army.

Another factor is the huge mobility tax that the German government slaps on its citizens. The German government charges a punitively high tax for each liter of gasoline sold, equal to 80% of the price paid for fuel. Germans still drive a lot: the country invented the freeway and the ease and opportunity that an automobile offers still trumps the government billions spent on public transit. The German Sueddeutsche Zeitung, (the German equivalent of the New York Times) wrote a lengthy article, stating essentially that the automobile has survived every dire threat that it has faced over the last hundred years and will probably remain the king of the road. At least, they added, until a transit approaches the convenience and flexibility offered by the car. As it is, most new construction still takes place in the outer suburbs.

Germans love the woods. German identity since the time of Tacitus is closely linked with the woods. Herman the German was able to use the cover of the forest to wipe out the Roman legions in the Teutoburger Forest. The folklore costumes that one occasionally sees here are almost always hunter green. Many Germans do not necessarily see nature as the unscathed landscape made to order by God. The forest is not wild here; it is an almost entirely man-made affair. German forests are essentially tree farms but Germans love them. They use these forest preserves as well. They are a ritualized part of the landscape, every Sunday they fill with locals walking off their Sauerbraten.

In Germany, the natural world is something already conquered; it is viewed as something useful, a garden that the Germans themselves are stewards to. It is not the vast pristine wilderness of America. It is more like a vast public garden. German farmers and foresters have to allow pedestrians the right to walk on their land. Open space is also public space. The positive side is that the livability in many of these communities is much higher for those who can afford it. There is always a forest or a bike path/jogging path somewhere nearby.

Germany is still rather affordable compared to other European countries, especially those that were caught up in the real estate bubble of the last decade. France, The Netherlands, Switzerland and Ireland have all experienced housing booms that have pushed the median multiple for housing affordability well above 6 to 7 or 8 and in places like Ireland and the greater London area to well above 10. Prices are also shrinking in the East, which is losing people every year.

The East is actually one of the more interesting markets due to its loss of people and resulting housing price slumps. Government infrastructure investments could turn the Leipzig and Jena areas as well as Dresden into potential growth markets. Certain areas like the east and the Ruhr Valley, where cities like Bochum and Monchengladbach are worse off than some parts of the East.

Germany, along with most of Europe, cannot be transposed to the US. The sundry factors contributing to its present-day appearance are not replicable in the US. Germany is a place of small plots and inefficient builders with prices severely limiting home ownership. It is not all bad, especially for those already in place. However, it limits Germans ability to improve their quality of life. Germans, like the vast majority of citizens in industrialized countries, prefer the speed, convenience and comfort of the automobile. Germans, for better or worse, saw how the conquerors from the US lived and tried to emulate it in their own lifestyles. Many still see America as a role model, even though that will not stop the cognoscenti here from writing sanctimonious articles condemning America and trying to stop cities from “sprawling”.

Kirk Rogers resides in Bubenreuth on the outer edges of Nuremberg and teaches languages and Amercan culture at the University of Erlangen-Nuremberg’s Institut für Fremdsprachen und Auslandskunde. He has been living in Germany for about ten years now due to an inexplicable fascination with German culture.

March 23, 2009

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