New Geography

Author: Joel Kotkin

  • In Southern California, It Takes an Assortment of Villages

    Among urban historians, Southern California has often had a poor reputation, perennially seen as “anti-cities” or “19 suburbs in search of a metropolis.” The great urban thinker Jane Jacobs wrote off our region as “a vast blind-eyed reservation.”

    The Pavlovian response from many local planners, developers and politicians is to respond to this criticism by trying to repeal our own geography. Los Angeles’ leaders, for example, see themselves as creating the new sunbelt role model, built around huge investments Downtown and in an expensive, albeit underused, subway and light-rail network.

    Yet the notion of turning Southern California into a dense, New York hybrid makes very little sense. Nor has it done much for the regional economy, certainly in Los Angeles. The City of Angels thrived during its period of development into a multipolar region; in the 21st century, as Downtown has gained a few thousand hipsters, the rest of the city has lagged economically while population and job growth – including in tech – has been more robust in the surrounding counties of Orange, Riverside and San Bernardino.

    Building off Strength

    Southern California, even before the advent of the freeways, developed along the lines of an “archipelago of villages.” Even Downtown Los Angeles, the one legitimate urban core in the region, lost its central relevance by the 1930s and, despite all its self-promotion, employs close to the smallest share – well short of 3 percent – of the regional workforce of any large region in the country.

    In contrast, the two fastest-growing areas in Southern California – the Inland Empire and Orange County – are arguably the largest regions in the country without a real downtown. Rather than a negation of urbanity, as some suggest, these areas are nurturing an expansive archipelago of smaller hubs, each serving distinct geographies, populations, tastes and purposes, and constitute the building blocks for Southern California’s urban future.

    Read the entire piece at The Orange County Register.

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

  • Around The World, The Tide Is Turning Against Megacities

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

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

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

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

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

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

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

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

    Peak Megacity In Much Of The World

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

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

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

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

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

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

    Where Megacities Will Grow Fastest

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

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

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

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

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

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

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

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

  • What’s the Best Way Up for Minorities?

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

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

    Two Paths to Success

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

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

    Read the entire piece at The Orange County Register.

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

    Photo “asian american” by flicker user centinel.

  • Where American Families Are Moving

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

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

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

    Download the full report (pdf) here.

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

    Why Families Head to the Suburbs

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

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

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

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

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

    Exclusionary and Opportunity Regions

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

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

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

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

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

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

    Where the Future Is Being Built

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

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

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

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

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

    The Emerging Family/Childless Divide 

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

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

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

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

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

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

    Download the full report (pdf) here.

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

  • New Report: Building Cities for People

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

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

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

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

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

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

    Download the full report (pdf).

  • The End of Localism

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

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

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

    The Authoritarian Impulse

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

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

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

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

    The Rule of the Wise-people

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

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

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

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

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

    The Road to Imperium

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

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

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

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

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

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

    Slouching towards Imperium

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

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

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

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

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

    The Coming Conflict

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

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

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

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

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

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

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

    This piece first appeared at The Daily Beast

    .

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

    Barack Obama Photo by Bigstock.

  • Seeing the West as Worse

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

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

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

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

    Western ethos deconstructed

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

    Read the entire piece at the Orange County Register.

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

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

  • The New Masters of the Universe

    Every age produces its own brand of oligarchs – feudal lords, banking gnomes, captains of industry. Our age has its own incipient ruling class, the tech oligarchs.

    The ascendency of these new hegemons is barely complete, and could conceivably be slowed or even reversed. But the tidal wave of new wealth, and even greater influence, will not be easily turned back. Six of the world’s 20 richest people are from tech or related industries like media and entertainment. In America, the media-tech sector in 2014 accounted for five of the top wealthiest people. Not surprisingly, most self-made billionaires are either quite old (the Koch Brothers, the Waltons, Warren Buffett) or got rich the traditional way: they inherited it. In contrast, virtually all self-made billionaires under 40 are techies.

    The making of a new ruling class

    With their massive, and early, accumulated wealth, the tech oligarchs will dominate us long after the inheritors have financed the last art museum or endowed the newest hospital. Two decades from now, many tech oligarchs will still be young enough to be counting their billions and thinking up new ways to ‘disrupt’ our lives – for our own good, of course.

    This tech elite differs from the founding generation of Silicon Valley. The early leaders – Bob Packard, Bob Noyce, Andrew Grove, Jerry Sanders – tended to be centrist and pragmatic. After all, the early Valley was heavily subsidised by the military and NASA, and produced industrial products that faced enormous competition. They also managed vast organisations with large numbers of ordinary employees. Like other industrialists, they were concerned with low-cost power and water, reasonable labour regulation and the health of the overall manufacturing economy.

    This changed when a combination of keen Asian competition and Californian regulation gradually shifted the chip and computer manufacturers out of Silicon Valley, which has lost roughly 80,000 manufacturing jobs since 2000. The new Valley is predominately post-industrial. For example, only 30 of about 16,000 production workers for the iPod are based in the US.

    As Silicon Valley became software valley, tech firms no longer needed large numbers of semi-skilled workers and the network of small subcontractors to keep the industrial machine going. Those services, if needed, could be performed in India, China, Utah, Texas or North Carolina. ‘The job creation has changed’, notes long-time San Jose economic development official Leslie Parks. ‘We used to be the whole food chain and create all sorts of middle-class jobs. Now, increasingly, we don’t design the future – we just think about it. That makes some people rich, but not many.’

    What has made ‘the sovereigns of cyberspace’, to quote author Rebecca MacKinnon, so wealthy is precisely what made John D Rockefeller so rich: control of markets. Google, for example, accounts for over 60 per cent of search, while, alongside Apple, it control almost 90 per cent of the operating systems forsmartphones. Similarly, over half of American and Canadian computer users use Facebook, making it easily the world’s dominant social-media site.

    More important still, the tech oligarchs control portions of their companies that would make most oilmen or auto executives fantastically rich. Indeed, owners of only one energy-related firm, Koch Industries, have made it into the top 10 of the Forbes 400. The CEO and chairman of Exxon-Mobil, America’s largest oil company, Rex Tillerson, controls 0.04 per cent of Exxon stock, while Google’s Sergey Brin, Larry Page and Eric Schmidt control roughly two thirds of the company’s voting stock. Larry Ellison, the founder of Oracle, Bill Gates and Mark Zuckerberg also control outsized shares of their firms.

    These firms are now so rich that they resemble countries. Besides General Electric, a classic conglomerate, Apple, Microsoft, Cisco, Oracle and Google often have more dollars on hand than the US government. And their influence can be felt in every office, home and phone through intrusive software that provides a trove of personal data that would make the old KGB turn from red to green with envy. As Google’s Eric Schmidt put it: ‘We know where you are. We know where you’ve been. We can more or less know what you’re thinking about.’

    The politics of the intangible class

    The liberation from the constraints of the tangible economy has inflamed the ambitions of the oligarchs. ‘Politics for me is the most obvious area [to be disrupted by the web]’, suggests former Facebook president Sean Parker. The success with which social media assisted President Obama’s re-election effort offers clear support to Parker’s assertion.

    In allying with Obama, tech is moving in the opposite direction to much of the business community, particularly small business, which Gallup finds a hotbed of anti-Obama sentiment. Other traditional industries like oil and gas have also turned overwhelmingly to the right, as Obama has targeted them for their role in climate change. In 1990, energy firms gave out almost as much to Democrats as Republicans; in 2014 they gave over three times as much to the GOP.

    In contrast, the oligarchs, as they have become ever richer, are clearly moving leftwards. In 2000, the communications and electronics sector was basically even in its donations; by 2012, it was better than two to one Democratic. Microsoft, Apple and Google – not to mention entertainment companies – all overwhelmingly lean to the Democrats with their donations.

    The transformer and the disrupters

    There seems a natural affinity between President Obama, who sees himself as a force for transformation, and the tech oligarchs, who love ‘disruption’. Each shares a high estimate of their basic intelligence and foresight; it is an alliance of those who feel they should own and shape the future.

    ‘We need to run the experiment, to show what a society run by Silicon Valley looks like’, venture capitalist Chamath Palihapitiya recently argued. This effort could appeal to a public that tends to regard the tech firms as better than more mundane businesses or the government. Indeed, when Steve Jobs, a 0.000001 per center worth $7 billion, and rugged capitalist of the classic type, passed away, protesters openly mourned his demise.

    One critical PR advantage the tech firms enjoy is that most, with a notable exception of Amazon, don’t mistreat blue-collar workers, or unions, since they have few of either. This gets them a free pass from social-justice warriors unavailable to traditional firms. Andrew Carnegie and Henry Ford mostly exploited workers in Pittsburgh or Detroit, and paid a price; the exploitation of the oligarchs takes place far away in Chengdu, Guangzhou or India.

    This alliance with the Democrats will not fade after Obama leaves office. Obama has enlisted several tech giants – including venture capitalist John Doerr, LinkedIn billionaire Reid Hoffman and Sun Microsystems co-founder Vinod Khosla – to help plan out his no doubt lavish and highly political retirement. Many former Obama aides have gone to work for tech firms. Uber, for example, uses Obama campaign manager David Plouffe to lead its PR team, while other former officials have descended to other tech firms such as AirBnB, Google, Twitter and Amazon.

    What is the ideology of Silicon Valley?

    Silicon Valley may be progressive in its social or environmental positions, but it has little interest in class politics, an issue being pushed by Vermont Senator Bernie Sanders in the Democratic primaries. ‘They don’t like [Bernie] Sanders at all’, notes San Francisco-based researcher Greg Ferenstein, who has been polling internet company founders for an upcoming book. Sanders’ emphasis on income redistribution, protecting union privileges and pensions hardly reflects the views of the tech elite. ‘He’s an egalitarian liberal’, Ferenstein explains, ‘these people are tech liberals. Equality is a non-issue in Silicon Valley.’

    What are ‘tech liberals’? Ferenstein provides a picture of an unconscious elitism that runs through their worldview. Although their industry is overwhelmingly based in the San Francisco Peninsula’s suburban sprawl, the internet oligarchs, he claims, want ‘everyone’ to move to the urban centre, something not remotely practical for most middle- and working-class families. They also advocate for strict environmental laws and ever higher energy prices, which don’t threaten their lifestyles, but are often devastating to those below them.

    Yet there is a danger that the issue of inequality could eventually affect the tech industry’s PR. Unlike the earlier products, such as computers or semiconductors, the products the tech industry now develop have provided little of value to the rest of society, whether in terms of jobs (outside of the Bay Area) or boostingproductivity. The social-media industry has made the likes of Mark Zuckerberg fantastically wealthy, but it’s difficult to maintain it has improved living conditions for most Americans.

    At the same time, well-financed Valley ‘disruption’ can be seen as a threat to many businesses and individuals. These already include groups such as cab drivers, owners and workers at small hotels, realtors and travel agents, and newspaper scribblers, all of whom are being driven out of the middle class. The much-needed ‘sharing economy’ often offers these workers part-time employment without much in the way of benefits.

    Even in the tech industry itself, American workers find themselves increasingly replaced by imported foreign workers. Oligarchs such as Mark Zuckerberg are anxious to expand H1B and other ‘guest-worker programmes’ that bring in low-cost indentured tech workers to the Valley, as well as to IT departments across corporate America.

    Of course, this hardly makes the tech oligarchs unique – after all, capitalists have always sought out the cheapest source of labour, and understandably so. But it does mean that, in oligarchic America, where even getting a degree in computer science and software does not guarantee a bright future, the hip, PR-friendly ‘don’t be evil’ appearance of tech companies may soon be looking a little less cool.

    Techies on the green team

    Perhaps nothing separates the oligarchy from the rest of business than its support for Obama’s climate-change policies. Many industries see these policies as a direct threat to their very existence, but this means little to moguls, who can shift their energy needs to cheaper locales, such as the Pacific Northwest or the South. In California, such policies have less an impact on the temperate coast than in the less glamorous interior. As one recent study found, the summer electrical bills in rich, liberal and temperate Marin come to $250 monthly, while in impoverished, hotter Madera, the average is twice as high.

    Not that there’s anything cynical about the tech oligarchy’s commitment to green policies. It is entirely sincere – the oligarchs really do believe, as do many liberal, Democratic types, that they are fighting the good fight. But that doesn’t mitigate the effects of their worldview.

    Still, the oligarch’s energy politics are not entirely based on the greater good. ForSilicon Valley and Wall Street supporters, there are also some business opportunities in the assault on fossil fuels. Cash-rich firms like Google and Apple, and many high-tech financiers and venture capitalists, have invested in subsidised green energy firms. Some, like Elon Musk, exist largely as creatures of subsidies. Neither SolarCity nor Tesla would be so attractive, or might not even exist, without generous handouts.

    The brave new world of the oligarchs

    If we want to get some idea how an oligarch-dominated economy works, take a look at my adopted home state – of over 40 years – of California, the home of the most powerful oligarchs. The Golden State sees itself as the ‘brains’ of the tech culture and proof of the bountiful ingenuity of ‘the creative class’.

    Yet behind the media glitz, California is increasingly a bifurcated state, divided between a glamorous software- and media-based economy concentrated in certain coastal areas, and a declining, and increasingly impoverished, interior. Overall, nearly a quarter of Californians live in poverty, the highest percentage of any state, including Mississippi, and, according to a recent United Way study, close to one in three people are barely able to pay their bills.

    So how do the oligarchs make this work politically? One way is simply to make alliances – through contributions and media support – with politicians who are most hurt by California’s regulatory vice. This strategy is evident in the odd coupling of San Francisco hedge-fund billionaire, Tom Steyer, the biggest funder of climate-change hysteria, and his Latino sidekick, California Senator Kevin de Leon, who represents impoverished East Los Angeles.

    The new political configuration works in classic medieval fashion, with the rich providing the necessities for the poor, without providing them opportunity for upward mobility or the chance, God forbid, to buy a house in the outer suburbs. With the fading of California’s once powerful industrial economy – Los Angeles has lost much of its manufacturing base over the past decade – its working classes now must be mollified by symbolic measures, such as energy rebates, subsidised housing and the ever illusive chimera of ‘green jobs’.

    This ‘upstairs-downstairs’ California coalition could presage the country’s political future. Perhaps it’s best to think of it as a form of high-tech feudalism, in which the upper classes run the show, but bestow goodies on the struggling masses. This alliance will allow the present tech oligarchs to thrive without facing a populist challenge that could interfere with their profits and expansion into other markets.

    In the oligarchic era, the bottom line is an increasing concentration of power in ever fewer hands. Romantic notions that the high-tech era would be marked by a surge of small, independent companies are belied by the market domination of a few firms and their expansion into ever more business areas. Companies like Google begin to morph into conglomerates, or American versions of Japan’skeiretsu, with interests in such businesses as health, media and autonomous vehicles.

    Similar keiretsu are forming around companies such as Apple, Amazon and Facebook, which now can buy their way into what were once seen as unrelated markets. This is married to increased media power, which will allow them to set the agenda in coming decades. This is being accomplished both through the purchase of old media – the most important being the purchase by Amazon’s Jeff Bezos of the venerable Washington Post – or by new sites controlled by firms like Yahoo, the No1 news site in the US, with 110million monthly viewers, or Google’s news site with 65,000,000 users.

    The intrusion of tech firms into media is likely to become even more pervasive as the millennial generation grows up and the older cohorts begin to die off. Among those over 50, only 15 per cent, according to a Pew report, get their news over the internet; among those under 30, the number rises to 65 per cent.

    Ultimately the ambitions of the oligarchs are boundless. Firms like Amazon CEO Jeff Bezos’ Blue Origin, and Elon Musk’s Space X, seek to lead the world in space exploration. If NASA continues to retreat from many areas of space exploration, it is likely that, in the future, the heavens may end up belonging to the oligarchs as well.

    When historians write the history of this age, their attention likely will focus on the rise of these oligarchies. They already control California, with its unparalleled creative and technical prowess, as well as the dominant cultural power centre in the English-speaking world. Tomorrow the new oligarchs will be looking to consolidate their power in Washington. And the day after that, maybe the world and galaxy as well.

    This piece originally appeared at Spiked.

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

    Official White House Photo by Pete Souza.

  • Can GOP Fatten Up Around the Middle?

    At a recent breakfast in Washington, D.C., a rising young Republican senator explained the divisions in his party in a particularly succinct manner: a conflict between the donor base and the GOP rank-in-file.

    “The donor class,” this senator told me, “really cares about one thing: lower taxes. Most in the party don’t see this as the most crucial issue.”

    Although some donors care about other issues, including Israel and, sometimes, social issues, the big money in the party is focused on reducing tax burdens. After all, if you are an investment bank, pharmaceutical firm or oil company, your concerns involve finding ways to avoid, or at least slow down, the taxman.

    In the past, many grass-roots Republicans may have shared this concern, but other issues – like a weak economy, rising inequality and crime, as well as terrorism – increasingly may become more important. The very nature of the current recovery, beneficial to the donor class but not so much for the vast majority of Americans, works against the traditional antitax focus of the GOP. Does anyone on Main Street believe lower capital-gains taxes, which would preserve more of the wealth of hedge funders, corporate hegemons and venture capitalists, helps them?

    Read the entire piece at The Orange County Register.

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

    Photo by Gage Skidmore from Peoria, AZ, United States of America (Donald Trump) [CC BY-SA 2.0], via Wikimedia Commons

  • Los Angeles: City Of Losers?

    When I arrived in Los Angeles four decades ago, it was clearly a city on the rise, practicing its lines on the way to becoming the dominant metropolis in North America. Today, the City of Angels and much of Southern California lag behind not only a resurgent New York City, but also L.A.’s longtime regional rival, San Francisco, both demographically and economically.

    Forty years ago, San Francisco was a quirky, backward-looking town, a haven for the gilded rich and hippies, a quaint but increasingly insignificant town. The Dodgers and the Lakers ruled the California sporting world.

    Today things couldn’t be more different. San Francisco and its much bigger southerly neighbor, Silicon Valley, have morphed into the global epicenter of the technology industry, with 25 tech companies on the Fortune 500. In contrast, Los Angeles County, which has almost twice as many people, is home to only 15 Fortune 500 firms total.

    Meanwhile, the Giants and the Golden State Warriors have become consistent winners while the Dodgers, Angels and Clippers disappoint and the Lakers are painfully unwatchable.

    Although there is a desire to repeat L.A.’s success with the 1984 Olympics and bring football back to town, that would only put a happy veneer over the city’s core problem: the long-term decline of its business sector. In 1984, the city had a strong and highly motivated business elite highlighted by 12 Fortune 500 companies, who could help sponsor the games and provide management expertise. Now there are only three within city limits, with the departure of major corporations such as Lockheed, Northrop Grumman, Occidental Petroleum and Toyota, and the loss of hundreds of thousands of manufacturing jobs.

    In contrast, the Bay Area is full of thriving companies and successful entrepreneurs, many of them astoundingly young. Of the 30 richest people in the country, five live in the Bay Area; Southern California has only one, the Irvine Company visionary Chairman Donald Bren, and he’s in his eighties. The Bay Area accounts for the vast majority of American billionaires under 40; if not for Snapchat’s founders, Evan Spiegel and Bobby Murphy, as well Elon Musk, who lives in L.A. but spends much of his time working in Northern California, where Tesla and Solar City are located, L.A. would be off the list.

    This unfavorable contrast with the Bay Area, sadly, is not just a recent development. Since 1990 Los Angeles County has added a paltry 34,000 jobs while its population has grown 1.2 million. In contrast, the Bay Area, which added roughly the same number of people during the same time, gained a net 500,000 jobs, mostly in the suburbs. In 1990 Los Angeles had around the same number of private-sector jobs per person as the Bay Area, roughly 410 per 1,000; today Los Angeles’ private-sector jobs to population ratio has dropped to 364 per 1,000 while the Bay Area’s has grown to 415. Worse yet, while the Bay Area has increased its share of high-wage jobs to 33 percent since 1990, Los Angeles percentage fell to 27.7 percent.

    How L.A. Blew It In Technology

    As recently as the 1970s, as UCLA’s Michael Storper has pointed out, L.A. stood on the cutting edge not only in hardware, but also software. Computer Sciences Corp. was the first software company to be listed on a national stock exchange. In 1969, UCLA’s Leonard Kleinrock invented the digital packet switch, one of the keys to the Internet.

    In 1970, IT’s share of the economy in greater Los Angeles and in the Bay Area was about the same (in absolute terms it was bigger in L.A.). By 2010, IT’s share was four times bigger in the north than in the south.

    Storper links the decline in large part to the strategies of the biggest high-tech companies in the L.A. area: Lockheed Martin, Rockwell and TRW focused on defense and space, essentially becoming dependent on government spending. In contrast, the Bay Area technology community, although also initially tied to Washington, began to move into more commercial applications. In the process they also developed a huge network of venture capitalists who would continue to help found and finance fledgling firms.

    Today the San Jose area enjoys the highest percentage of workers in STEM (science technology engineering and mathematics-related jobs) in the country, over three times the national average. San Francisco and its immediate environs, largely as a result of the social media boom, now has a location quotient for STEM jobs of 1.75, meaning it has 75% more tech jobs per capita than the national average. In contrast, the Los Angeles area barely makes it to the national average.

    Southern California remains an attractive to place to live, but it’s hard to imagine it as the next Silicon Valley. L.A. had its chance, and, sadly, it blew it.

    The Growing Demographic Crisis

    Storper and other critics suggest that Los Angeles failed in part because it tried to maintain high-wage blue collar industries while the Bay Area focused on information and biotechnology. The problem now, however, are the factors in L.A. that drive industry away, such as ultra-high electricity prices and a high level of regulation. Even amidst the recent industrial boom in many other parts of the country, Los Angeles has continued to lose manufacturing jobs; Los Angeles’ industrial job count stands at 363,900, still the largest number in the nation, but down sharply from 900,000 just a decade ago.

    This decline places L.A in a demographic dilemma. Like the Midwestern states that lured African-American to fill industrial jobs during the Great Migration, L.A. attracted a large number of largely poorly educated immigrants, mostly from Mexico and Central America. These people came for jobs in factories, logistics and home-building, but now find themselves stranded in an economy with little place for them outside low-end services.

    Although inequality and racial disparities also exist in the Bay Area, the issue is far more relevant in Southern California. The Bay Area’s population is increasingly dominated by well-educated Anglos and Asians. San Francisco’s population is 22 percent black or Hispanic; in Los Angeles, this percentage approaches 60 percent.

    Poverty and lack of upward mobility are the biggest threats to the region. In Los Angeles, a recent United Way study found 35 percent of households were “struggling,” essentially living check to check, compared to 24 percent for the Bay Area.

    A recent study by the Public Policy Institute of California and the Stanford Center on Poverty and Inequality found that, once adjusted for cost of living, Los Angeles has the highest level of poverty in the state, 26.1 percent. Rents are out of control for many people who are struggling in an increasingly low-wage dominated economy. In fact, Los Angeles now is the least affordable city for renters, based on income, according to a recent UCLA paper.

    Is There A Way Out?

    Despite these myriad challenges, Los Angeles, and indeed all of Southern California, is far from a hopeless case. It is unlikely to become the next Detroit and is better positioned by natural and human resources than it’s similarly troubled big city competitor Chicago. It still enjoys arguably the best climate of any major city in the world, remains the home of Hollywood, the nation’s dominant ports and a still impressive array of hospitals and universities.

    At least some of the city’s leadership has begun to recognize the challenges facing the region. “The city where the future once came to happen,” a devastating blue ribbon report recently intoned, “is living the past and leaving tomorrow to sort itself out.”

    This recognition might be the first step toward a turnaround, but the area really has increasingly little control over its own fate. Today San Francisco and its immediate environs, despite its much smaller population, is home to virtually every powerful politician in the state: both its U.S. Senators, the Governor, the Lieutenant Governor and the Attorney General. Not surprisingly, state policies on everything from greenhouse gases, urban density and transit to social issues follows lines that originate in, and largely benefit, San Francisco.

    Most troubling of all, the local leadership seems clueless about how to resuscitate the economy, or even how this vast region actually operates. Neither another Olympics nor getting a football team or two will make a difference. Even worse is the effort by Mayor Eric Garcetti to densify the city to resemble a sun-baked version of New York.

    This has been part of the agenda for developers, greens and most local academics for the better part of 30 years. But the problem remains: Los Angeles, and even more so its surrounding region, is notNew York, nor can it ever be. It is, and will remain, a car-dominated, multi-polar city for the foreseeable future. After all the vast majority of Southern California’s population growth — roughly 75 percent — came after the Second World War and the demise of the Red Cars, L.A.’s  much lamented pre-war transit system.

    Some outside observers such as progressive blogger Matt Yglesias now envision L.A. as “the next great transit city.” Yet in reality, despite spending $10 billion on new transit projects, the share of transit commuters has actually dropped since 1990; today nearly 31 percent of New York area commuters take public transportation, while 6.9 percent do so in Los Angeles-Orange County.

    People take cars because, for most, it’s the quickest way to work. Few transit trips take less time, door to door than traveling by car, not to mention the convenience of working at home. The average transit rider in Los Angeles spends 48 minutes getting to work, compared to people driving alone, at 27 minutes.

    This reflects L.A.’s great dispersion of employment, which is not compatible with a transit-driven culture. In greater New York, 20 percent of the workforce labors in the central core; in San Francisco, the percentage is roughly 10 percent. But barely 2 percent do so in Los Angeles. The current, much ballyhooed revival of downtown Los Angeles then is less a reflection of economic forces, than the preferences of a relatively small portion of population for a more urban lifestyle and as market for Asian flight capital. Its population of 50,000 is about the same as Sherman Oaks or the recently minted city of Eastvale in the Inland Empire.

    Rather than seek to become someplace else, Los Angeles has to confront its key problems, like its woeful infrastructure, particularly roads, among the worst in the country, and a miserable education system. These are among the likely reasons why people with children are leaving Los Angeles faster than any major region of the country.

    Yet Los Angeles is not without allure. Overall Los Angeles-Orange has grown its ranks of new educated workers between 25 and 34 since 2011 as much as New York and San Francisco and much more than Portland.

    Perhaps most promising is the region’s status as the number one producer of engineers in the country, almost 3,000 annually. This raw material is now being somewhat wasted, with as many as 70 percent leaving town to find work.

    What Los Angeles needs to do is to provide the entrepreneurial opportunities to keep its young at home, particularly the tech oriented. As the Bay Area has shown, it is possible to reshape an economy based on pre-existing strength. For L.A. the best regional strategy would be based on a remarkably diverse economy dominated by smaller firms, a population that, for the most part, seeks out quiet residential neighborhoods and often prefers working closer to home than battling their way to what remains a still unexceptional downtown.

    One place where Los Angeles could shine is in melding the arts and technology. Unlike New York, which has relatively few engineers, Los Angeles still has the largest supply in the country. The Bay Area may be more appealing to nerddom, but is unexceptional in the arts. This revival will not come from the remaining suits in L.A.; roughly half of workers in the arts are self-employed, according to the economic forecasting firm EMSI.

    This entrepreneurial trend will continue since, with the studio system clearly in decline, as large productions go elsewhere, digital players such as Netflix, Amazon, Apple as well as Los Angeles based Hulu have become more important. Los Angeles could expand its arts-related niche by supplying the content that these expanding digital pipelines require.

    Given the corporate exodus, and the difficult California business climate, overall L.A.’s recovery must come from the bottom up, and be dispersed throughout the region. According to Kauffman Foundation research, the L.A. area already has the second highest number of entrepreneurs per 100 people in the country, just slightly behind the Bay Area.

    The next L.A. can succeed, but not by trying to duplicate New York or San Francisco. Instead there’s a need for greater appreciation why so many millions migrated here in the first place: great weather, beaches, suburban-like living and entrepreneurial opportunities. Only when the local leadership rediscovers the uniqueness of L.A.’s DNA can the region undergo the renaissance of this most naturally blessed of places.

    This article first appeared at Forbes.

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

    Photo: Downtown Los Angeles toward the Hollywood Hills and the San Fernando Valley (by Wendell Cox)