New Geography

Author: Joel Kotkin

  • The Looming Political Battle of the Ages

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

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

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

    The Silent Generation

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

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

    Read the entire piece at the Orange County Register.

    Joel Kotkin is executive editor of 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: driki

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

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

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

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

    Who are America’s Kulaks?

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

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

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

    The Decline of a Class

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

    Rather than a new age of democratic capitalism imagined by Reagan era conservatives, we increasingly live in a world dominated by large companies. The overall revenues of Fortune 500 companies have risen from 58 percent of nominal GDP in 1994 to 73 percent in 2013. At the same time, small business start-ups have declined as a portion of all business growth, from 50 percent in the early ’80s to 35 percent in 2010. Indeed, a 2014 Brookings report (PDF) revealed that small business “dynamism,” measured by the growth of new firms compared with the closing of older ones, has declined significantly over the past decade, with more firms closing than starting for the first time in a quarter century. Only 35 percent of small business owners, according to a recent survey by the National Small Business Association, express optimism about the economy.

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

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

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

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

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

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

    Resisting the New Duopoly: Big Government and Big Business

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

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

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

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

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

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

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

    Trump, Sanders, and the future of the Kulaks

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

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

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

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

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

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

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

    This piece first appeared at The Daily Beast.

    Joel Kotkin is executive editor of 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: Main Street America Russell, Kansas by http://www.cgpgrey.com [CC BY 2.0], via Wikimedia Commons

  • Environmental Activists Turn up the Rhetorical Heat

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

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

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

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

    Read the entire piece at The Orange County Register.

    Joel Kotkin is executive editor of 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.

  • Oil Bust? Bah — North Dakota Is Still Poised To Thrive

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

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

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

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

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

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

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

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

    Beyond The Buffalo Commons

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

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

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

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

    Do The Plains Have A Future?

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

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

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

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

    This piece first appeared in Forbes.

    Joel Kotkin is executive editor of 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 “Western North Dakota” by Aaronyoung777 – Own work. Licensed under CC BY 4.0 via Wikimedia Commons.

  • It’s Becoming Springtime for Dictators

    In a rare burst of independence and self-interest, the California Legislature, led by largely Latino and Inland Democrats, last month defeated Gov. Jerry Brown’s attempt to cut gasoline use in the state by 50 percent by 2030. These political leaders, backed by the leftovers of the once-powerful oil industry, scored points by suggesting that this goal would lead inevitably to much higher fuel prices and even state-imposed gas rationing.

    Days later, however, state regulators announced plans to impose similarly tough anti-fossil-fuel quotas anyway. This pronouncement, of course, brought out hosannas from the green lobby – as well as their most reliable media allies. Few progressives today appear concerned that an expanding, increasingly assertive regulatory state, as long as it errs on the “right side,” poses any long-term risks.

    Welcome to the new age of authority, in which voters’ mundane concerns are minimized, and the bureaucracy – backed by an elected executive – rules the roost, armed with full confidence that it knows best. Nor is this merely a California phenomenon. Rule by decree has become commonplace in Washington, D.C., as President Obama seems to dictate policies on everything from immigration to climate change without effective resistance from a weak Congress and a listless judiciary.

    While no modern leader since President Richard Nixon has been so bold in trying to consolidate power, this centralizing trend has been building for decades. Since 1910, the federal government has doubled its share of all government spending to 60 percent and grows ever more meddlesome in people’s daily lives. Its share of GDP has now grown to the highest level since the Second World War.

    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.

    Flickr photo by Pranav Bhatt of drivers in Los Angeles.

  • The Energy Election

    Blessed by Pope Francis, the drive to wipe out fossil fuels, notes activist Bill McKibben, now has “the wind in its sails.” Setting aside the bizarre alliance of the Roman Catholic Church with secularists such as McKibben, who favor severe limits of family size as an environmental imperative, this is a potentially transformational moment. 

    Simply put, the cultural and foreign policy issues that have defined U.S. politics for the past have century are increasingly subsumed by a divide over climate and energy policy. Progressive pundits increasinglyenvision the 2016 presidential election as a “last chance,” as one activist phrased it, to stop “climate change catastrophe.” As this agenda gets ever more radical, the prominence of climate change in the election will grow ever more obvious.

    The key here is that the green left increasingly does not want to limit or change the mix of fossil fuels, but eliminate them entirely, the faster the better. The progressive website Common Dreams, for example, proposes eliminating fossil fuels within five or six years in order to assure “reasonable margin of safety for the world.”

    This new militancy is a break from the recent past, when many greens embraced natural gas and nuclear power as practical, medium-term means to slow and even reverse greenhouse gas growth. But the environmental juggernaut, deeply entrenched within the federal bureaucracy and pushed by a president with seemingly limitless authority, is committed increasing to the systematic destruction of one of the country’s most important, and high-paying, industries. One goal is to demonize fossil fuel producers along the lines of the tobacco industry.

    The pope’s intervention has bolstered the tendency within the environmental movement not to allow any challenge to its own version of infallibility. This, despite discrepancies between some models of climate change and what has actually taken place.

    As we have moved from a rational discussion of the issue toward an increasingly dogmatic agenda, we have lost sight of more pragmatic, and less economically painful, ways to reduce greenhouse gases through methods such as conservation, the substitution of natural gas for coal, and a re-embrace of nuclear power. As the Breakthrough Institute has shown, most reductions in greenhouse gases in the United States have not come from subsidized renewable energy sources but instead from improved efficiency and the rise of natural gas at the expense of coal. Overall, solar and wind, the favorites of the greens, account for barely 1.35 percent of the world’s energy.

    The Breakthrough Institute’s pragmatism intends to create a middle ground between the left, which demonizes even the slightest criticism of green policy dogma, and the right, which equally mistakenly dismisses climate change as essentially a fabrication. But with the extremes in control of the debate, we can expect next year to mainly hear divisive discourse instead of solutions.

    The Geography of Energy

    In some parts of the country, most notably the Northeast and the West Coast, the imperatives of climate change demand the destruction of the fossil fuel industry. In others, those that depend the most on low-cost energy, the attack on fossil fuels represents a moral threat to local economies, jobs and well-being. The battleground will be in the Great Lakes, arguably the most critical region for the next election. Contrary to its sad sack image, the economy there has been on the rebound for years. Virtually every Great Lakes state except Illinois now enjoys unemployment rates below the national average. Several, led by the Dakotas, Minnesota, Nebraska, and Iowa, boast job rates that are among the nation’s highest. 

    Three key factors are propelling this comeback: an energy boom, a resulting jump in manufacturing, and relatively low housing costs. Energy firms have been a major source of new work for industrial firms, and lower electricity costs have provided U.S. manufacturers with an energy price advantage over European and Asian firms. German electricity prices, a result of their “green” energy policies, are almost three times the average of those in the United States.

    The administration’s directive to all but ban coal could be problematic for many Midwest states, including several—Iowa, Kansas, Ohio, Illinois, Minnesota and Indiana—that rank among those most reliant on coal for electricity. Not surprisingly, much of the opposition to the EPA’s decrees come from Heartland states such as Oklahoma, Indiana, and Michigan.  

    Politically, the energy-rich states running from Texas, Oklahoma, and Louisiana up to the Dakotas may be all but lost to the Democrats. Before the decline in oil prices, these areas enjoyed a gusher in energy jobs, providing high wage employment (roughly $100,000 annually) that exceeds compensation for information, professional services, or manufacturing. Due largely to energy, they have enjoyed the highest jobs growth since 2007 and were among the first states to gain back the jobs lost in the recession. 

    In contrast, the areas that form the solid base of the progressives—basically the Northeast and the West Coast—have an increasingly small stake in fossil fuel industries. California, which has the fifth largest oil reserves among the states, has basically decided to abandon the industry, gradually pushing the remnants of what was once a thriving sector out of the state.

    For the most part, with the notable exception of Pennsylvania, Northeastern states have little in the way of fossil fuels, and have gradually been eliminating much of their manufacturing base for over a half century. Nor do they have much need for electricity for industry as they continue to deindustrialize. Manufacturing accounts for barely 5 percent of state domestic product in New York and 8 percent in California—but 19 percent in Michigan and 30 percent in Indiana.

    Rise of the Climate-Industrial Complex

    Climate activists such as hedge fund billionaire Tom Steyer increasingly couch their policies on theological grounds, one reason why the pope’s intervention was so timely. Stark self-interest is also at work. Many of the Silicon Valley and Wall Street supporters of green policies have been among those most anxious to capitalize on big oil’s demise. 

    This includes cash-rich firms such as Apple, as well as many high-tech financiers and venture capitalists. Some of the biggest new fortunes, notably that of Elon Musk, are largely the creatures of subsidies. Neither SolarCity nor Tesla would be so attractive—and might even not exist—without generous handouts from taxpayers.

    In contrast to traditional manufacturers, capitalists like Musk have a well-developed interest  in taking advantage of the most draconian energy legislation. Other tech figures, including top executives atGoogle, have benefited from government-subsidized renewable energy schemes, including a remarkably inefficient and expensive solar project that has obliterated a huge part of the Mojave Desert. 

    No surprise, then, that the crony capitalists of Silicon Valley and their Wall Street financiers have emerged as primary funders of the green left. Much like the oil firms that help finance Republicans, particularly those who are climate change skeptics, the new oligarchs have solid business reasons to embrace the pontiff’s environmental dogma, though they seem unlikely to follow his admonitions to eschew corporate greed.

    Ironically, the new militancy among greens is likely to hurt most the poor and working class with whom Pope Francis takes pains to identify. A rapid ban on fossil fuels in the developing world would hurt efforts to increase access to electricity. Today, some 1.3 billion people  are off the grid, and not by choice. In sub-Saharan Africa, where much of the world’s population growth is expected to take place, roughlytwo-thirds of the population lacks regular access to electricity.

    As Bjorn Lomborg has pointed out, whatever the negative effects of climate change on the poor, the impact of no electricity and poor sanitation are infinitely greater. Climate change policies, he notes, are an inefficient way to accomplish such things as reducing malaria; the Kyoto Protocol’s carbon cuts could save 1,400 malaria deaths for about $180 billion a year. More traditional approaches could save 300,000 people for about $500 million year.

    Greens seem to have little idea what the poor want or need. When asked, people in developing countries prioritize such things as education, health care, job opportunities and better food; climate change ranked 16th—dead last on the list—according to a UN survey.

    But the green gentry retain their catechisms. Prince Charles embraces the “intuitive grammar” of ultra-dense slums such as Mumbai’s Dharavi, which, he claims, have perfected more “durable ways of living” than those in the suburbanized West.San Francisco’s Friends of the Earth  similarly applauds slum-dwellers as an “inspiration” for the low-carbon urban future, while Stewart Brand openly endorses the notion, “Save the Slums,” because they will save the planet.

    Needless to say, it’s unlikely these apostles of urban squalor would want their children to live like that and it is absurd to suppose that leaders of such emerging powers as India and China have any intention of giving up on their gains in reducing poverty. We cannot expect they will accommodate the passions of wealthy Westerners at the expense of their own people.

    A War on the Western Working Class?

    Those most likely to pay for the new green agenda will be middle- and working-class populations in what are now rich countries. Germany spends hundreds of billions of dollars on solar panels and wind turbines that provide only an unreliable 15 percent of its electricity and 3 percent of its total energy. German consumers pay three times more for electricity than the average American. It’s so bad that Germans have added a new term to the language: “energy poverty.”

    Perhaps the best test case for the impact of draconian climate policies is in my adopted home state of California. Here, high energy costs brought about by renewable mandates have devastated manufacturing growth and boosted electric bills, particularly in the poorer, and hotter, inland areas. Asone recent study found, the summer electrical bills in rich, liberal Marin come to $250 monthly while in impoverished Madera, the average is twice as high.

    Of course, energy policy is just one of the things raising poverty in a state where many of the world’s greatest fortunes are being minted. But it’s part of a climate change-driven agenda that is also somewhat responsible for the state’s absurdly high housing costs by consciously limiting affordable suburban growth. 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 are barely able to pay their bills.

    With the blessings of the pope and broad support in the media, few Democrats are likely to stand up against the green policies. Hillary Clinton’s shift against the Keystone XL Pipeline, despite strong union support for the project, shows that she is willing to trade blue-collar workers in the Heartland for the approval of the coastal gentry, among whom climate change has acquired something of a religious aspect. “Whether it’s eating vegetarian or wearing organic eye shadow, we’re all shopping for absolution,” observes Daniel Engber in Slate.

    Ultimately Democrats will embrace the determined attempt by President Obama to secure his “legacy” as the great calmer of the Earth’s climate. Yet there’s some question how effective these policies will prove. Invariably, efforts will follow to silence those skeptical of the current course, particularly regarding the economic impact on working-class voters. In California, Steyer and his allies have worked overtime to suppress any potential dissent from politicians who hail from the largely Latino, blue-collar districts hit most directly by these policies.

    Despite a massive investment in Latino “grassroots” front groups, as well as politicians, this effort is not foolproof. This month a handful of largely Latino and inland Democrats, some of them backed by the state’s residual energy industry, killed Jerry Brown’s attempt to force a 50 percent reduction in fossil fuel use by 2030, a measure that would have allowed the state impose gas rationing.

    To be sure, this rebellion may prove short-lived, as state regulators now seem determined to impose by decree what could not even make it through the state’s Democratic-dominated legislature. Steyer loyalists such as State Senate President Kevin de Leon will continue to mollify his impoverished constituents–nearly half of all households in his district earn less than $34,000 a year—with handouts from “cap and trade funds” and the ever illusive chimera of “green jobs.”

    In truth, if anyone has benefited from green policies and subsidies, it’s been the well-off.

    They are the ones who benefit from subsidized solar, electric vehicles, and fuel-efficient cars; a recent UC Berkeley study found the top fifth of households received 60 percent of these wealth transfers, compared to barely 10 percent of those in the bottom quintile. Generally speaking, barrio residents don’t drive $100,000 Teslas.

    So will climate change be an effective issue for the Democrats next year? There is room for skepticism. In 2014 Steyer and his acolytes spent some $85 million on “green” candidates, only to fail impressively. Geography and class work against their efforts, driving longtime working and middle-class Democrats, driving voters in places like Appalachia, the Gulf Coast and some areas of the Great Lakes increasingly out of the Democratic Party.

    It is not even certain that Millennials, faced with diminishing prospects for good jobs and home ownership, will prove reliable backers of a draconian climate agenda. One recent survey suggested that young voters are actually less likely to identify as “environmentalist” than previous generations. 

    Like extreme social conservatism on the right, climate change thrills the coastal “base” of the Democratic Party, but threatens to lose support from other parts of the electorate. Despite the duet of hosannas of both the hyper-secular media and the Bishop of Rome, a policy that seeks, at base, to reduce living standards may well not prove politically sustainable.

    This piece originally appeared at Real Clear Politics.

    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.

    Midwest drilling rig photo by Bigstock.

  • China Catches Cold: What That Means For The Rest Of Us

    For the last century, one enduring cliché has been that when America sneezes, the world catches a cold. But now the big power with the sniffles is China.

    China’s rise has been the most profound development of the past half century, turning a moribund, rural country into a highly urbanized economic superpower. Hundreds of millions have been lifted out of poverty, and markets around the world reshaped. China alone accounted for a whopping 24.1% of global economic growth from 2003 to 2013. according to the IMF.

    This also means that when China stumbles, as it is now, the impact is widely felt. The current economic slowdown, and the government’s reaction to it, notably currency devaluation and possible controls of capital flight, could impact economies today much as American crises brought on a global depression in the 1930s and ushered in a global recession seven years ago.

    Some claim that China is headed toward a total financial meltdown. But it seems more prudent to assess the impact of China’s economic retreat with the caveat that this may be a short-term phenomenon, as the country showed remarkable resiliency through the recent global recession. However, in the short term, there are several categories of cities which may feel some downdraft from China’s slowdown.

    The Luxury Cities

    Outside of the stock market, probably the biggest impact of China’s swoon will be in real estate. Real estate and hospitality, mostly hotels, accounted for 65% of the $6.4 billion in U.S. investment by Chinese interests in the first half of 2015. Owning property is something of an obsession among Chinese, in part due to an instinctive distrust of the stock market. Despite all the attention paid by Western media to the Chinese stock market crash, only one in 30 Chinese own stock.

    Chinese have been investing heavily in overseas real estate now for a decade, and for the most part those investments are concentrated, not surprisingly, in what I call the “luxury cities,” wealthy global hubs where some Chinese also want to settle but historic returns also have been highest. This has been a major part of the outflow of capital from China, which has been accelerated by the perception of a weakening economy.

    But now there are indications that the Communist Party is ready to impose greater restrictions on private overseas investment, which could start slowing the outflow of funds into real estate, notes Mollie Carmichael, an analyst at John Burns Real Estate Consulting. This could upend economies in many parts of the high-income world.

    Globally the most popular cities for Chinese real estate investors are spread over a wide territory, including such places as Vancouver, Toronto, Australia’s Melbourne and Sydney, Singapore and London. Some experts are already warning of a crash in multi-family apartment across Australia. Each of these cities has a sizable Chinese minority. The huge Chinese investment in Vancouver began before the transfer of Hong Kong back to China from Britain, but the flow of money has continued in recent years.

    These impacts also will be felt in the United States, where Chinese rank second only to Canadians as real estate investors. Buyers from China, Hong Kong and Taiwan spent $22 billion on U.S. homes in the year ending March 2015, up 72% from the same period in 2013 according to the National Association of Realtors. But this surge may be coming to an end, particularly in coastal Southern California, the San Francisco Bay Area, New York and Hawaii, which have been favorites among of Chinese investors. John Burns reports an imminent decline in Chinese investment activity in Orange County, a hotbed for flight capital.

    These areas, not incidentally, have also been hotbeds of real estate inflation in the bubble era and again more recently. A slowdown in Chinese investment could halt, or even reverse, some of the big bets being made there. Of course, this could also be music to the ears of prospective new American investors, and homebuyers, who now do not have to deal with competition from Chinese investors.

    The Commodity Economy

    Some of the biggest impacts of China’s slowdown have been in commodities, notably oil, gas and food. As demand for these products decline, the impact on cities around the world that depend on this sector could be severe. This is most evident in the developing world, from Brazil to Nigeria to South Africa; a drop in Chinese investment, notes Brookings, could be disastrous for African countries that have grown to rely on capital from the Middle Kingdom.

    Also at risk are Canadian cities such as Calgary as well as Australian cities, notably Perth, that also have gotten rich selling raw materials to China. Australia, with an economy and population less than a 10th that of America’s, exports twice to the Middle Kingdom than the United States.

    Any slowdown in China will help undermine oil prices. None of this will be good for such places asHoustonOklahoma City and much of Louisiana, which are already hurting from supply competition with OPEC. Similarly a decline in farm prices, also related to China’s flagging demand, could hit such farm-oriented metropolitan areas as Omaha, Fargo and Minneapolis. The Great Plains, which has thrived from the commodity boom, could take a bit of a hit.

    Yet there’s good news here, particularly for American consumers and those in developing countries, whose food prices have eased. Low energy prices also could help “downstream” producers of oil products, such as refineries, petrochemical facilities and some pharmaceuticals companies. This, notes Houston economist Bill Gilmer, could actually help industrial parts of Houston, particularly along the ship channel, amidst negative impacts on businesses involved in energy exploration and development.

    The Industrial Sector

    China’s ascendency has been powered by its factories. Foreign companies that supply the high-end machinery that they use will be hurt, including many in Germany and Switzerland. Exports are already falling from South Korea, a manufacturing powerhouse increasingly dependent on China trade. This means trouble for Seoul, Munich and the Ruhr urban area. The Port of Hamburg, Germany’s largest, is already seeing a decline in its exports to China.

    Here in the United States, a slowdown could hurt companies like Caterpillar and John Deere, which have sent loads of earth-moving and other equipment to assist China’s massive building boom, as well as to developing countries who buy the equipment needed to meet Beijing’s once seemingly insatiable appetite.

    It would also hurt American centers of precision manufacturing such as Milwaukee and greater Detroit; last year Michigan exported $3.4 billion in machinery to China. The Wolverine States’exports to the Middle Kingdom have surged 1,500% since 2000, far outstripping gains in the rest of the world. Ohio, another bellwether industrial area, has seen the Chinese share  of its exports grow from 2% in 2000 to close to 8% last year. Small industrial towns like Peoria and agricultural equipment firms in places like Fargo could be threatened by a commodity decline. The impacts will be felt heavily on the West Coast as well, particularly around Seattle; some 20% of Washington’s exports go to China, led by aircraft.

    Some might see China’s decline as a harbinger of better times for American, Japanese or European producers, but the impact may be exactly the opposite. It may well be as well that Chinese companies, faced with a slowdown at home and not great prospects elsewhere, will redouble their efforts in the United States. This is already a concern in the U.S. steel industry, which sees Chinese devaluation and the oversupply of steel there leading to ever fiercer price competition.

    Some believe that a weakened China will open itself up to penetration by America’s highly advanced service sector. But this is certainly not the intention of the Chinese. Last year I visited Shenzhen’s Qianhai development, which by 2020, according to local authorities, anticipates attracting some $65 billion in investment, a working population of 650,000 people generating annual gross domestic product of around $25 billion. It is squarely aimed at the global service business and located in one of the world’s newer and most spectacular megacities.

    Rather than cede ground when under attack, the Communist Party seems headed back toward reliance on what they hope are streamlined state-owned companies and a massive new trillion yuan stimulus to spur demand; in other words, back to the future. They will likely continue to intensify their repression of domestic dissent.

    This will outrage those of us who believe in human rights and free markets. But China’s leaders may not be so concerned about the tender sensibilities of investment bankers, civil rights advocates, economists or the Western media. Their priority is maintenance of the regime, which depends on continued improvement of Chinese living standards. Whether we benefit or not is likely a matter of indifference to the leaders of a self-confident people now trying to establish their Asian preeminence, and could from that vantage point seek to become the No. 1 power in the world.

    This piece originally 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 of SEG Plaza electronics market by Bobbie Johnson, licensed under Creative Commons.

  • Becoming America the Not-So-Beautiful

    “They don’t know history, but they are making it. But what are they making?”

    – Victor Serge, “The Conquered City,” 1932

    In contrast to the physical sciences, and even other social sciences, the study of history is, by nature, subjective. There is no real mathematical formula to assess the past. It is more an art, or artifice, than a science.

    Yet how we present and think of the past can shape our future as much as the statistics-laden studies of economists and other social scientists. Throughout recorded time, historians have reflected on the past to show the way to the future and suggest those values that we should embrace or, at other times, reject.

    Today we are going through, at both the college and high school levels, a major, largely negative, reassessment of the American past. In some ways, this suggests parallels to the strategy of the Bolsheviks about whom Serge wrote. Under the communists, particularly in the Stalinist epoch, the past was twisted into a tale suited to the needs of the state and socialist ideology. This extended even to Bolshevik history, as Josef Stalin literally airbrushed his most hated rivals – notably Leon Trotsky, founder and people’s commissar of the Red Army – into historical oblivion.

    Progressive Assault

    In the modern reformulation, America – long celebrated as a beacon of enlightenment and justice – now is often presented as just another tyrannical racist and sexist state. The founding fathers, far from being constitutional geniuses, are dismissed as racist thugs and suitable targets of general opprobrium.

    Initially, the progressive assault made some sense. Traditional “civics” education often presented American history in an overly airbrushed manner. Many of the nation’s worst abuses – the near-genocide of American Indians, slavery, discrimination against women, depredations against the working class and the environment – were often whitewashed. These shortcomings now have been substantially corrected in recent decades, from what I can see in my children’s textbooks.

    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 Scott Catron (User:Zaui) (Own work) [GFDL, CC-BY-SA-3.0 or CC BY 2.5], via Wikimedia Commons

  • Wave of Migrants Will Give Europe an Extreme Makeover

    The massive, ongoing surge of migrants and refugees into Europe has brought up horrendous scenes of deprivation, along with heartwarming instances of generosity. It has also engendered cruel remembrances of the continent’s darkest hours. But viewed over the long term, this crisis may well be the prelude to changes that could dissipate, and even overturn, some of the world’s most-storied and productive cultures.

    Some may prefer to ignore the long-term impacts of huge migration from the often-chaotic developing world – where 99 percent of the world’s population growth will be taking place – to the more orderly, prosperous and low-fertility richer countries. Separated from the daily drama, the human movement from Syria, the rest of the Middle East and Africa can be seen as potentially changing European society forever by breaking its already-weak Christian foundations and threatening the future of Europe’s elaborate welfare states. In many ways this invokes the vision laid out in the 1973 French novel “Le Camp des Saints,” which envisioned a Europe overwhelmed by a tide of poor refugees.

    These concerns, of course, are not simply European. The flow of generally lower-income people from Central and South America has emerged – largely courtesy of the demagogic Donald Trump – as a key political issue in the Republican presidential race. Claims, based on federal employment data, that immigrants have gained far more jobs in the recovery is the kind of thinking that keeps Trump in business. Concerns about other transfers from the Third World to the First World have also surfaced in a host of other countries, including Canada, Australia and even orderly Singapore.

    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.

  • Neither Olympics Nor NFL Will Rescue Los Angeles

    We all tend to have fond memories of our greatest moments, and for Los Angeles, the 1984 Olympics has served as a high point in the city’s ascendency. The fact that those Summer Games were brilliantly run, required relatively little city expenditure and turned a profit confirmed all those things we Angelenos loved about our city – its flexibility and pragmatism and the power of its civic culture.

    After Boston turned down its chance to be the U.S. entrant in the sweepstakes to host the 2024 Olympics, it’s natural that Mayor Eric Garcetti and the city establishment, at least what’s left of it, desire a return engagement. But the Los Angeles of today barely resembles the vibrant, optimistic city of 30 years ago.

    “The city where the future once came to happen,” a devastating report from the establishmentarian Los Angeles 2020 Commission recently intoned, “is living the past and leaving tomorrow to sort itself out.”

    Last Best Chance?

    So rather than a bold move toward establishing the city’s preeminence, the current move smacks more of a Hail Mary pass. It also seems to embody a kind of nostalgia, a sentiment reflected not only in the desire to relive Olympic glory but also in the efforts to bring pro football back to town, including, perhaps, a return of the long-departed Rams.

    Yet ultimately, neither a third Olympics (the first was in 1932) nor the return of NFL football can alter a city’s fate. After all, the 2000 Athens Olympics did not lead to a new Greek renaissance, but may, instead, have contributed to that country’s fiscal morass. Summer Games in Montreal (1976) and Atlanta (1996) did not usher in a golden age for those cities, but periods of decline.

    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.

    “Olympic Torch Tower of the Los Angeles Coliseum” by unknown, U.S. Air Force – http://www.defenseimagery.mil; VIRIN: DD-SC-85-08929. Licensed under Public Domain via Wikimedia Commons.