New Geography

Author: Joel Kotkin

  • U.S. Cities Have A Glut Of High-Rises And Still Lack Affordable Housing

    Perhaps nothing thrills mayors and urban boosters like the notion of endless towers rising above their city centers. And to be sure, new high-rise residential construction has been among the hottest areas for real estate investors, particularly those from abroad, with high-end products accounting for 8o% of all new construction.

    Yet this is not an entirely high-end country, and these products, particularly the luxury high-rises in cities, largely depend on a small segment of the population that can afford such digs.

    No surprise, then, that we see reports of declining prices in areas as attractive as New York, Miami and San Francisco, where a weakening tech market is beginning to erode prices, much as occurred in the 2000 tech bust, John Burns Real Estate Consulting notes. There have been big jumps in the number of expired and withdrawn condo listings, particularly at the high end; last year, San Francisco saw a 128% spike in the number of withdrawn or expired listings for condos over $1.5 million.

    Several factors suggest the high-rise residential boom is over, including a growing recognition that these structures do little to relieve the housing affordability crisis facing middle-class residents, the inevitable aging of millennials and their shift to suburbs and less expensive cities, and the impending withdrawal of some major foreign investors who have come to dominate the market in many cities.

    Cost And Affordability

    One common refrain among housing advocates and politicians is that high-rise construction is a solution to the problem of housing affordability. The causes of the problem, however, are principally prohibitions on urban fringe development of starter homes. Critics also note that high-rises in urban neighborhoods often replace older buildings, which are generally more affordable.

    One big problem: High-density housing is far more expensive to build. Gerard Mildner, the academic director of the Center for Real Estate at Portland State University, notes that development of a building of more than five stories requires rents approximately two and a half times those from the development of garden apartments. Even higher construction costs are reported in the San Francisco Bay Area, where the cost of townhouse development per square foot can double that of detached houses (excluding land costs) and units in high-rise condominium buildings can cost up to seven and a half times as much.

    Almost without exception, then, the most expensive areas are precisely those that have the most high-rise buildings: New York, San Francisco, Seattle and Miami. More to the point, these buildings don’t tend to be occupied by middle-class, much less working-class, families. And in many cases, these units are not people’s actual homes; in New York, as many as 60% of new luxury units are not primary residences, leaving many unoccupied at any given time.

    Even worse, a high-density strategy tends to raise the price of surrounding real estate. As Tim Redmond, a veteran San Francisco journalist, points out, luxury apartments often tend to be built in areas with older, more affordable buildings. The notion that simply building more of an expensive product helps keep prices down elsewhere misses the distinction between markets; the high-rises in Washington, DC, are not the affordable units that the vast majority of city residents need.

    Other cities favored by luxury developers – like Vancouver, Toronto, Seattle and San Francisco – have also seen deteriorating affordability and, in some cases, a mass exodus of middle- and working-class residents, particularly minorities. San Francisco’s black population, for example, is roughly half of what it was in 1970. In the nation’s whitest major city, Portland, African-Americans are being driven out of the urban core by high-density gentrification, partly supported by city funding. Similar phenomena can be seen in Seattle and Boston, where long-existing black communities are gradually disappearing.

    The New Demography Works Against This Trend

    It is common in retro-urbanist circles to maintain that more Americans, particularly younger ones, will opt to remain customers for ever-greater density, a preference that could sustain an ever-growing market for high-rises. Yet that notion may be past its sell-by date, with demographic evidence suggesting that most Americans, including younger ones, are looking less for an apartment in the sky than for a house with a little backyard.

    Suburbs, consigned to the dustbin of history by many urban boosters, are back. Demographer Jed Kolko, analyzing the most recent Census Bureau numbers, suggests that population growth in most big cities now lags that of their suburbs, which have accounted for more than 80% of metropolitan growth since 2011. Even where the urban core renaissance has been most prominent, there are ominous signs. The population growth rate for Brooklyn and Manhattan fell nearly 90% from 2010-11 to 2015-16.

    The real trend in migration is to sprawling, heavily suburbanized areas, particularly in the Sun Belt. To be sure, there are high-rises in most of these markets – quite a gusher of them in Austin, for instance – but the growth in all these regions is overwhelmingly suburban.

    The most critical factor over time may be the aging of millennials. Among those under 35 who do buy homes, four-fifths choose single-family detached houses, a form found most often in suburbs. Surveys consistently find that most millennials see suburbs as the ideal place to live in the long run. According to a recent National Homebuilders Association report, more than 66%, including those living in cities, would actually prefer a house in the suburbs.

    The largely anecdotal media accounts of millennial lifestyles conflict with reality, Kolko notes. Although younger millennials have tended toward core cities more than previous generations, the website FiveThirtyEight notes that those ages 30-44 are actually moving to suburban locales more than in the past.

    The China Syndrome

    Given the limits of the domestic market, the luxury high-rise sector depends heavily on foreign investors.

    Already, harder times for some traditional investors – Russians and Brazilians, for example – have hurt the Miami market, long attractive to overseas buyers. There is now three years’ worth of inventory of luxury high-rises there, with areas such as Edgewater, Midtown and the A&E District suffering an incredibly high inventory of seven and a half years. Miami Beach is faring a bit better but is still a buyer’s market at a little over two years of inventory.

    Still, the greatest threat to the luxury high-rise market may come from the Far East, the region of the world with the most surplus capital and, given the rapidly aging society, often the fewest profitable places to put it. Korea and Japan have lots of money sitting around looking for a home. Japan and its companies, according to World Bank data, are hoarding more than $2 trillion in unused liquid assets.

    But as in all things East Asian, China stands apart. Last year, the country had a record $725 billion in capital outflows, according to the Institute of International Finance. China is now the largest foreign investor in US real estate.

    But now the Chinese government has placed strong controls on these investments, which could leave some places vulnerable. In Downtown Los Angeles, according to local brokers, many of the new high-rise towers are marketed primarily in China. (LA claims to have the second-highest number of cranes, behind only Seattle.)

    These expensive units are far out of reach for the younger people who tend to inhabit the neighborhood, instead serving as what one executive called “vertical safe deposit boxes” for people trying to get their money out of China. If the new crackdown on such investments is strongly enforced, this could leave a lot of expensive units without buyers. Prices have already softened, and with several new luxury buildings coming up, Downtown is likely to experience a glut.

    Even in Manhattan, another market long dependent on foreign investment, projects are now stalled, including some once-hot properties in Midtown that are delaying their sales launches. Overall sales of condos over $4 million dropped 18% last year from the high levels of the previous three years. The ultra-premium market for condos over $10 million saw a 5% sales decrease in 2016.

    Changes Ahead

    The current slowdown, and perhaps longer-term stabilization, could lead to lower rates of migration out of the expensive cores.

    Yet this trend is not likely to reverse the movement of younger people to less dense areas. Luxury high-rise units were not built for families, and they are often located in areas with poor schools and limited open space. They may simply become high-priced rentals, attractive no doubt to childless professionals but not to middle- and working-class families.

    In the end, the real need is not for more luxury towers. What is needed, particularly in America’s cities, from the urban core to the urban fringe, is the kind of housing middle- and working-class families can afford.

    This piece originally appeared at Forbes.com.

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

    Photo: Sharon Mollerus, via Flickr, using CC License.

  • Trump Damaged Democracy, Silicon Valley Will Finish It Off

    When Democrats made their post-election populist “Better Deal” pitch, they took a strong stance against pharmaceutical and financial monopolies. But they conspicuously left out the most profound antitrust challenge of our time—the tech oligarchy.

    The information sector, notes The Economist, is now the most consolidated sector of the American economy.

    The Silicon Valley and its Puget Sound annex dominated by Google, Apple, Facebook, Amazon, and Microsoft increasingly resemble the pre-gas crisis Detroit of the Big Three. Tech’s Big Five all enjoy overwhelming market shares—for example Google controls upwards of 80 percent of global search—and the capital to either acquire or crush any newcomers. They are bringing us a hardly gilded age of prosperity but depressed competition, economic stagnation, and, increasingly, a chilling desire to control the national conversation.

    Jeff Bezos harrumphs through his chosen megaphone, The Washington Post, about how “democracy dies in the dark.” But if Bezos—the world’s third richest man, who used the Post first to undermine Bernie Sanders and then to wage ceaseless war on the admittedly heinous Donald Trump—really wants to identify the biggest long-term threat to individual and community autonomy, he should turn on the lights and look in the mirror.

    Trump’s election and volatile presidency may pose a more immediate menace, but when he is gone, or neutered by lack of support, the oligarchs’ damage to our democracy and culture will continue to metastasize.

    Killing the Old Silicon Valley

    Americans justifiably take pride in the creative and entrepreneurial genius of Silicon Valley. The tech sector has been, along with culture, agriculture, and energy, one of our most competitive industries, one defined by risk-taking and intense competition between firms in the Valley, and elsewhere.

    This old model is fading. All but shielded from antitrust laws, the new Silicon Valley is losing its entrepreneurial yeastiness—which, ironically enough, was in part spawned by government efforts against old-line monopolists such as ATT and IBM. While the industry still promotes the myth of the stalwart tinkerers in their garages seeking to build the next great company, the model now is to get funding so that their company can be acquired by Facebook or one of the other titans. As one recent paper demonstrates, these “super platforms” depress competition, squeeze suppliers and reduce opportunities for potential rivals, much as the monopolists of the late 19th century did (PDF). The rush toward artificial intelligence, requiring vast reservoirs of both money and talent, may accelerate this consolidation. A few firms may join the oligarchy over time, such as Tesla or Uber, but these are all controlled by the same investors on the current Big Five.

    This new hierarchy is narrowing the path to riches, or even the middle class. Rather than expand opportunity, the Valley increasingly creates jobs in the “gig economy” that promises not a way to the middle class, much less riches, but into the rising precariat—part-time, conditional workers. This emerging “gig economy” will likely expand with the digitization of retail, which could cost millions of working-class jobs.

    For most Americans, the once promising “New Economy,” has meant a descent, as MIT's Peter Temin recently put it, toward a precarious position usually associated with developing nations. Workers in the “gig economy,” unlike the old middle- and working-class, have little chance, for example, of buying a house—once a sure sign of upward mobility, something that is depressingly evident in the Bay Area, along the California coast, and parts of the Northeast.

    Certainly the chances of striking out on one’s own have diminished. Sergei Brin, Google’s co-founder, recently suggested that startups would be better off moving from Silicon Valley to areas that are less expensive and highly regulated, and where the competition for talent is not dominated by a few behemoths who can gobble up potential competitors—Instagram, WhatsApp, Skype, LinkedIn, Oculus—or slowly crush them, as may be happening to Snap, a firm that followed the old model and refused to be swallowed by Facebook but went through with its own public offering. Now the Los Angeles-based company is under assault by the social media giant which is using technologies at its Instagram unit, itself an acquisition, that duplicate Snap’s trademark technologies and features.

    Snap’s problems are not an isolated case. The result is that the number of high-tech startups is down by almost half from just two years ago; overall National Venture Capital Association reports that the number of deals is now at the lowest level since 2010. Outsiders, the supposed lifeblood of entrepreneurial development, are increasingly irrelevant in an increasingly closed system.

    The New Hierarchy

    For all its talk about “disruption,” Silicon Valley is increasingly about three things: money, hierarchy, and conformity. Tech entrepreneurs long have enjoyed financial success, but their dominance in the ranks of the ultra-rich has never been so profound. They now account for three of world’s five richest people—Bill Gates, Jeff Bezos, and Mark Zuckerberg—and dominate the list of billionaires under 40.

    Unlike their often ruthless and unpleasant 20th century moguls, the Silicon Valley elite has done relatively little for the country’s lagging productivity or to create broad-based opportunity. The information sector has overall been a poor source of new jobs—roughly 70,000 since 2010—with the gains concentrated in just a few places. This as the number of generally more middle-class jobs tied to producing equipment has fallen by half since 1990 and most new employment opportunities have been in low-wage sectors like hospitality, medical care, and food preparation.

    The rich, that is, have gotten richer, in part by taking pains to minimize their tax exposure. Now they are talking grandly about having the government provide all the now “excess” humans with a guaranteed minimum income. The titans who have shared or spread so little of their own wealth are increasingly united in the idea that the government—i.e., middle-class taxpayers—should spread more around.

    Not at all coincidentally, the Bay Area itself—once a fertile place of grassroots and middle-class opportunity—now boasts an increasingly bifurcated economy. San Francisco, the Valley’s northern annex, regularly clocks in as among the most unequal cities in the country, with both extraordinary wealth and a vast homeless population.

    The more suburban Silicon Valley now suffers a poverty rate of near 20 percent, above the national average. It also has its own large homeless population living in what KQED has described as “modern nomadic villages.” In recent years income gains in the region have flowed overwhelmingly to the top quintile of income-earners, who have seen their wages increase by over 25 percent since 1989, while income levels have declined for low-income households.

    Despite endless prattling about diversity, African Americans and Hispanics who make up roughly one-third of the valley’s population, have barely 5 percent of jobs in the top Silicon Valley firms. Between 2009 and 2011, earnings dropped 18 percent for blacks in the Valley and by 5 percent for Latinos, according to a 2013 Joint Venture Silicon Valley report (PDF).

    Similarly the share of women in the tech industry is barely half of their 47 percent share in the total workforce, and their ranks may even be shrinking. Stanford researcher Vivek Wadhwa describes the Valley still as “a boys’ club that regarded women as less capable than men and subjected them to negative stereotypes and abuse.”

    While the industry hasn’t done much to actually employ women or minorities, it’s both self-righteously and opportunistically fed the outrage industry by booting right-wing voices from various platforms and pushing out people like former Google staffer James Damore, and before that Mozilla founder Brendan Eich after he made a small contribution to a 2014 measure banning gay marriage. Skepticism, once the benchmark of technology development, is now increasingly unwelcome in much of the Valley.

    This marks a distinct change from the ’80s and ’90s, when the tech companies—then still involved in the manufacturing of physical products in the United States—tended toward libertarian political views. As late as the 1980s, moderate Republicans frequently won elections in places like San Mateo and Santa Clara. Now the area has evolved into one of the most one-sidedly progressive bastions in the nation. Over 70 percent of Bay Area residents are Democrats up from 55 percent in the 1970s. Today, the Calexit backers, many based in the Valley, even think that the country is too dunderheaded, and suggest they represent “different,” and morally superior, values than the rest of the country.

    The Danger to Democracy

    If these were policies adopted by an ice-cream chain, or a machine-tool maker, they might be annoying. But in the tech giants, with their vast and growing power to shape opinion, represent an existential threat. Mark Zuckerberg whose Facebook is now the largest source of media for younger people, has emerged, in the words of one European journalist (PDF), as “‘the world’s most powerful editor.” In the past they were the primary carriers of “fake news,” and have done as much as any institution to erode the old values (and economics) of journalism.

    Both Facebook and Google now offer news “curated” by algorithms. Bans are increasingly used by Facebook and Twitter to keep out unpopular or incendiary views, and especially in the echo chamber of the Bay Area. This is sometimes directed at conservatives, such as Prager University, whose content may be offensive to some, but hardly subversive or “fake.” The real crime now is simply to question dominant ideology of Silicon Valley gentry progressivism.

    Even at their most powerful the industrial age moguls could not control what people knew. They might back a newspaper, or later a radio or television station, but never secured absolute control of media. Competing interests still tussled in a highly regionalized and diverse media market. In contrast the digital universe, dominated by a handful of players located in just a few locales, threaten to make a pluralism of opinions a thing of the past. The former Google design ethicist Tristan Harris suggests that “a handful of tech leaders at Google and Facebook have built the most pervasive, centralized systems for steering human attention that has ever existed.”

    Ultimately, particularly after the disasters associated with the Trump regime, the oligarchs seem certain to expand their efforts to control the one institution which could challenge their hegemony: government. Once seen as politically marginal, the oligarchs achieved a dominated role in the Democratic Party, in part by financing President Obama and later support for Hillary Clinton. In the Obama years Google operatives were in fact fairly ubiquitous, leading at least one magazine to label it “the Android Administration.” Since then a stream of Obama people have headed to Silicon Valley, working for firms such as Apple, Uber, and Airbnb. Obama himself has even mused about becoming a venture capitalist himself.

    Of course with Trump in power, the oligarchs are mostly on the outs, although the twitterer in chief tried to recruit them. Now many of Silicon Valley power players are supporting the “resistance” and lending their expertise to Democratic campaigns. Unlike undocumented immigrants or other victims of Trumpism, they can count on many GOP politicians to watch their flank until the lunatic storm recedes.

    In a future Democratic administration, as is already evident in places like California, the tech titans will use their money, savvy, and new dominance over our communications channels to steer and even dictate America’s political and cultural agendas to wield power in ways that even the likes of J.P. Morgan or John D. Rockefeller would envy.

    What started as a brilliant, and profoundly non-political extension of the information revolution, notes early Google and Facebook investor Robert McNamee, now looms as “a menace,” part of a systematic “brain hacking” on a massive scale. We can choose to confront this reality—as the early 20th century progressives did—or stand aside and let the oligarchs chart our future without imposing any curbs on their seemingly inexorable hegemony.

    This piece first appeared on The Daily Beast.

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

    Photo: Maurizio Pesce, via Flickr, using CC License.

  • 30 Days a Black Man

    The following is adapted from Bill Steigerwald’s new book 30 Days a Black Man: The Forgotten Story That Exposed the Jim Crow South. The book traces a forgotten but important 1948 undercover journalism mission into the Jim Crow South by a star Pittsburgh Post-Gazette newsman.

    Ray Sprigle, a Pulitzer Prize winner, disguised himself as a black man and spent a month seeing what life was like for the ten million African Americans living under America’s oppressive and humiliating system of apartheid.

    Sprigle’s nationally syndicated newspaper series about his experiences – and his passionate outrage at the un-American inequities he saw – shocked the white readers of the North, outraged the segregationist white newspaper editors of the South, pleased millions of black Americans and started the first debate in the national media about the future of legal segregation.

    Steigerwald’s book, available on Amazon, includes a snapshot of Pittsburgh’s vibrant Hill District, the integrated urban black working-class neighborhood nicknamed “Little Harlem” and made famous by the plays of August Wilson. Below is an excerpt from the book Kirkus Reviews calls a “rollicking, haunting American history”.

    Pittsburgh in White and Black

    Pittsburgh was feeling pretty good about itself in the fall of 1947. The capital city of what Franklin Roosevelt called “The Great Arsenal of Democracy” was still basking in the glory of supplying most of the steel America needed to win World War II. Its population was about to hit its all-time peak of 676,000. It was the twelfth largest city in the USA and the busy hub of a productive metropolitan area of 2.6 million. It was true that it was noisy, shockingly dirty, ugly, dense with people, clogged with traffic, polluted with industrial wastes, and pocked with hard urban poverty. But it had enormous corporate and private wealth, top-flight universities, and major-league culture and sports.

    Pittsburgh’s metropolitan population was 90 percent non-Latino white, predominantly Catholic, and heavily Democratic – and remains virtually the same today. Its huge blue-collar workforce was religiously pro-union. Inside Pittsburgh’s crowded city limits were a dozen middle-class urban neighborhoods, thousands of fine homes, and many mansions. There were also scores of ethnic working-class neighborhoods built on the sides of cliffs, on the top of hills, or stretched out in ravines and hollows or along the rivers. There was no single large black ghetto. But about 112,000 blacks, including many recent migrants from the South, lived within the city or nearby in tight neighborhoods in smaller towns throughout Allegheny County.

    With the war over, the “Smokey City” had finally started the long-overdue process of cleaning up its air. The average Pittsburgher had no reason to think their city was headed anywhere but up, and yet beneath the permanent fog of smoke and steam its sprawling four-hundred-acre steel mills were sliding toward obsolescence. Over the next three decades, metropolitan Pittsburgh would be forced to de-industrialize by national and global economic forces beyond its control. Its mighty steel industry would collapse. It would hemorrhage population, become the unofficial capital of the Rust Belt and then slowly recover by diversifying its stagnant economy, so that health care, education, and government became its chief job providers. But in the fall of 1947 it was still a prosperous industrial city living of its glorious past, a place where hourly wages of nearly two dollars and generous benefit packages made the region’s union steelworkers the highest paid blue-collar workers in the world.

    To say the city’s largely unskilled black workforce was not sharing equally in the industrial bonanza of Pittsburgh is an understatement…. Job opportunities for blacks in the North were far better than in the Jim Crow South, yet they were far from equal. In both public and private employment, black men and women in Pittsburgh were rarely able to get good blue-collar jobs and seldom able to advance if they got one. They were hired last, red first, and invariably paid less. There was a distinct color line in Pittsburgh’s steel and construction industries. About 40 percent of the area’s employers, including some of the largest, barred black employees outright. The unions that controlled the best industrial jobs were virtually lily-white and intent on staying that way. Meanwhile, white-collar jobs for black men were virtually nonexistent in business, finance, real estate, education, and medicine.

    Legal segregation in housing didn’t exist in Pittsburgh, but its urban and suburban neighborhoods were nevertheless segregated. As in other northern cities, real estate agents and private housing developers wrote restrictive covenants into the contracts of white homebuyers that prohibited the resale of their homes to someone of a different race. As Richard Rothstein documents in his best-seller, “The Color of Law: A Forgotten History of how our Government Segregated America,” federal housing policy enforced segregation by requiring builders to include restrictive covenants in their new developments. White landlords kept their apartment buildings segregated. Less subtly, real estate agents simply would never show a black couple a house for sale in a white suburb.

    Other common but no less degrading varieties of Jim Crow–like private discrimination existed throughout Pittsburgh. Black shoppers couldn’t try on clothes in downtown department stores. Black baseball fans had to sit in certain sections of Forbes Field, where the Pittsburgh Pirates played. Black kids were expected to swim only in the city’s traditionally all-black public swimming pools, and as late as 1945 blacks had to sit in the balcony at neighborhood movie theaters. The best hotels in the city refused black guests no matter how famous, which is why Jackie Robinson, Paul Robeson, Louis Armstrong, and other notable visitors regularly had to stay in the Hill District, the city’s largest and most important black neighborhood.

    The Hill District occupied the high ground in the center of Pittsburgh, but it was the city’s most depressed neighborhood. Nicknamed “Little Harlem” for its nationally famous jazz scene and jumping nightlife, it was a predominately poor but vibrant urban neighborhood of about forty thousand blacks and ten thousand whites. The Hill’s disorderly maze of residential streets, business districts, rundown apartments, and junked-up alleys looked over at the stumpy skyline of downtown from a steep but walkable slope. The area was originally settled by immigrants from Ireland, Germany, and Eastern Europe… By the late 1940s the Hill District contained the largest concentration of blacks in metropolitan Pittsburgh. It was also home to two dozen nationalities, including Italians, Russian Jews, Greeks, Eastern Europeans, and Syrians.

    An unregulated, loosely policed city within the city, the Hill’s bustling, self-sustaining, partially subterranean economy provided virtually everything its human melting pot needed. Its schools, shopping districts, nightclubs, gambling dens, and whorehouses were integrated. Blacks owned and operated hotels, bars, movie theaters, restaurants, groceries, drugstores, clothing stores, photography studios, florists, bookstores, funeral homes, and social clubs. There was a black YMCA. A cheap, efficient but illegal system of unlicensed cabs called “jitneys,” which still thrives in the Age of Uber, took care of the transit needs of everyone from grandmothers to bar hoppers. Rising above the dense human commerce and poverty were the spires and pointed roofs of two dozen churches and several synagogues.

    The Hill District was home to the Pittsburgh Courier, the country’s largest and most widely distributed black newspaper. But during the 1930s and 40s, it was more famous around the country for two things— baseball and jazz. The Pittsburgh Crawfords and the Homestead Grays, two of the best teams in the history of the professional Negro baseball leagues, were based in the Hill District. Its black community was an incubator of a dozen seminal jazz musicians including Earl “Fatha” Hines, the father of modern jazz piano, and baritone crooner Billy Eckstine, who in 1947 was poised to become white America’s first major black pop singer. Unlike venues downtown or in the suburbs, where blacks were usually excluded or made to use their own dance pavilion, the Hill’s entertainment complex was colorblind. Its integrated clubs and dancehalls were one of the few places in Pittsburgh where blacks and whites constantly socialized.

    Despite its energy and glamour, however, by 1947 Little Harlem was in terrible socioeconomic shape. The Lower Hill, where sixty-four hundred black and sixteen hundred white people lived, rented, worked, went to school, and worshipped, was particularly distressed. You could buy everything from refrigerators and Italian ice to marijuana, kosher hot dogs, and live chickens on its teeming streets. Violence was rare. The sidewalks were generally safe for kids, women, old folks, preachers, numbers runners, or a friendly game of craps. Men played checkers outside late into the night and people slept on fire escapes in the summer, but there was nothing romantic about its ratty urban poverty.

    The Lower Hill’s rough apartments and tenements were overcrowded, rundown, dirty from years of smoke and soot. Part of it was a classic urban slum. Communal faucets in the hallways and outdoor privies were common and private bathrooms were rare. Decades of malign neglect by city hall had made things worse. Streets—many not paved—were maintained poorly at best. Police and re protection, as well as health and sanitation services, was inadequate. Making matters worse, many of the Hill District’s middle-class blacks and professionals had moved to better black city neighborhoods. Most of the blacks left behind were poor or lower-middle working class. They were maids, garbage men, waitresses, bartenders, musicians, jitney drivers, and small-time criminals.

    For most of Pittsburgh’s older, squarer, law-abiding white population, Little Harlem was an unknown and scary place they’d never dare to go. Along with the great jazz scene, it was where poverty, vice, violence, and black people dwelled. The city’s three daily newspapers—the Press, the Post-Gazette, and Sun-Telegraph—rarely mentioned the Hill or its “colored” residents. They The all-white papers didn’t care about the Hill District’s present or its future. In 1947 city hall was quietly making plans to raze and redevelop Pittsburgh’s worst slums, which meant bulldozers and wrecking balls were coming for the unsuspecting people living in the city’s poor and politically defenseless neighborhoods. The Hill was the planners’ first target and the white newspapers were enthusiastic propagandists and cheerleaders in the brutal crusade for civic progress and urban renewal.

    To the square white men who made the important decisions in town—the entrenched Democratic Party machine, zillionaire businessman Richard King Mellon, and a handful of lesser Republican corporate honchos, boosters, and newspapermen—the Hill was not hip or culturally exciting. It was not a self-reliant community of hustling people, black and white, who needed to be given a helping hand by government or have their lives improved with new jobs or better housing. It was a cancerous slum that threatened the future growth, health, and beauty of their cosmetically challenged city. Pittsburgh’s powerbrokers had plans for a new cultural center for rich white people like themselves and a dozen identical upscale apartment towers. Within a decade a hundred acres of the Lower Hill would be clear-cut to the sidewalks and thousands of people who called it home, most of them poor and black, would be gone without a trace.

    Bill Steigerwald worked for the LA Times in the 1980s, the Pittsburgh Post-Gazette in the 1990s and the Pittsburgh Tribune-Review in the 2000s. He lives south of Pittsburgh and is a part-time Uber driver while he prays for Hollywood to turn 30 Days a Black Man into a movie.

  • A New Way Forward on Trade and Immigration

    President Donald Trump’s policy agenda may seem somewhat incoherent, but his underlying approach — developed, in large part, by now-departed chief strategist Steve Bannon — can be best summarized in one word: nationalism. This covers a range of issues from immigration and trade to cultural and ethnic identity, and generally the ones with the most polarizing impact on our political system.

    To many progressives, nationalism is, by its very nature, a dirty word, associated with fascist, Nazi or otherwise repressive regimes throughout history, and tied to violent extremists among the “alt-right,” like the small group of truly “deplorables” that recently surfaced in Charlottesville, Va. Liberal globalists detested Trump’s Poland speech defending Western values. To them, progressive theology matters more than affiliation with political tradition. Assaults on free trade also concern tech and other corporate chieftains, whatever their impact on the American working class.

    Yet, despite his consistently ill-considered rhetoric, Trump is actually about half-right on nationalism. The postindustrial, globalized economy has not worked for most Americans, as judged by their meager income growth. The West is, indeed, threatened not only by Islamic fundamentalists, but also by China, Russia, North Korea and other authoritarian states. In comparison with today’s progressives, the Roosevelts, Truman, Kennedy and Johnson would be considered rampant nationalists.

    Reassessing free trade

    Free trade, the fundamental economic dogma of the global corporate class and its neoliberal allies, has proven, in practice, to be far less benign than “global strategists” suggest. What works for Manhattan or San Francisco has had devastating impacts in more industrially oriented places like the Midwest and much of the South. Overall, notes a recent study from the labor-backed Economic Policy Institute, trade with China has cost an estimated 3.4 million jobs so far this century.

    Commerce Secretary Wilbur Ross points out — correctly — that many leading trading partners, like the EU and China, impose higher tariffs on incoming U.S. goods than what we impose on their exports. China, in particular, seeks to gain advantage over U.S. producers, embracing what William Galston, former policy adviser to President Bill Clinton, calls “technonationalism,” under which a country seeks to extort the surrender of intellectual property in exchange for market access and cold hard cash.

    In this sense, Trump’s hard-line position on trade — and his courting of foreign investors such as Toyota and Mazda — represents a justifiable throwback to the nationalist policies framed by Alexander Hamilton, which persisted until World War II. The problem here, as elsewhere, is that Trump’s pettiness and Twitter inanities allow our trading partners to divert the discussion away from the legitimate issues around international commerce.

    Read the entire piece in the Orange County Register.

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

    Photo by Dirk Dallas, via Flickr, using CC License.

  • Reconciling the three Democratic parties

    With President Donald Trump’s Dr. Demento impersonation undermining his own party, the road should be open for Democrats to sweep the next election cycle. And, for the first time since their horrific defeat of 2016, not only nationally but also in the states, the Democrats are slowly waking up to the reality that they need to go beyond the ritual Trump-bashing.

    No one will compare the recently released “A Better Deal: Better Skills, Better Jobs, Better Wages” slogan to Franklin D. Roosevelt’s New Deal, or even Newt Gingrich’s “Contract for America.” One Bernie Sanders supporter called it “anodyne, focus-grouped, consultant-generated pablum.” Yet, at least it attempted to identify the party with something other than Trump hatred, which is all most Americans think the Democrats are all about.

    The three Democratic parties

    Before this new approach can work, Democrats need to decide what kind of party they are, or what coalition can bring them back into power. None of the present factions is strong enough, by themselves, to win consistently on a national basis; some accommodation between often opposing tendencies must be found. Finally, there needs to be a credible message that derives not from carefully orchestrated focus groups and surveys — the Hillary Clinton approach — but rather one that resonates with the very middle- and working-class voters that the party needs to win back.

    Since the days of Franklin D. Roosevelt, the traditional Democratic Party has combined some degree of social moderation — albeit often too timid on issues related to gays and racial minorities — with a unifying message of economic growth, national security and upward mobility. Although business interests sometimes supported them, the old Democrats primarily directed their appeal to urban, and later suburban, middle- and working-class voters.

    By the 1970s, many of these voters were headed rightward, as Democrats’ positions on social issues, defense and civil rights moved sharply to the left. Seeking to make up for some of the loss of some traditional FDR voters, Bill Clinton reoriented the party to include the rising class of information workers who were often socially liberal but fiscally conservative. But Clinton’s political genius and down-home image also helped Democrats retain some New Deal working-class support, even while forging stronger ties to tech companies, the rising professional class and Wall Street.

    The third faction, the resurgent left, led by Sen. Bernie Sanders of Vermont, grew out of the clear failure of the second Democratic Party, led by its elite wing, to address the consequences of neoliberal economics, notably increased inequality, reduced social mobility and, to some extent, environmental degradation. To these activists, the Clintonian party is not much more than a light version of mainstream Republicanism.

    Read the entire piece in The Orange County Register.

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

    Photo by The Real Cloud2013, via Flickr, using CC License.

  • State Governments Are Oppressive, Too

    Historically, the battle over the size and scale of government has been focused largely on “states’ rights.” This federalist notion also has been associated with many shameful things, such as slavery, Jim Crow laws and other abuses of personal freedom.

    Yet, increasingly, the clearest threat to democracy and minority rights today comes not just from a surfeit of central power concentrated in Washington, D.C., but also from increased centralization of authority within states, and even regional agencies. Oppressive diktats from state capitals increasingly seek to limit local control over basic issues such as education, zoning, bathroom designations, guns and energy development.

    This follows a historical trend over the past century. Ever since the Great Depression, and even before, governmental power has been shifting inexorably from the local governments to regional, state and, of course, federal jurisdictions. In 1910, the federal level accounted for 30.8 percent of all government spending, with state governments comprising 7.7 percent and the local level more than 61 percent. More than 100 years later, not only had the federal share exploded to nearly 60 percent, but, far less recognized, the state share had nearly doubled, while that of local governments has fallen to barely 25 percent, a nearly 60 percent drop. Much of what is done at the local level today is at the behest, and often with funding derived from, the statehouse or Washington.

    Diversity vs. regimentation

    This trend is particularly notable in the country’s two megastates: California and Texas. Each is increasingly controlled by ideological fanatics who see in their statehouse dominion an ideal chance to impose their agenda on dissenting communities. In California, Jerry Brown’s climate jihad is the rationale for employing “the coercive power of the central state,” in his own words, to gain control over virtually every aspect of planning and development.

    In Texas, the impetus comes from the far right, which has been working to strip localities of their traditional ability to control their own affairs, which, as two Houston scholars recently pointed out, has been critical to that state’s success. These efforts cover a host of issues, from fracking and ride-sharing to transgender bathrooms, a topic which affects very few but has, absurdly, become the key issue for a legislative special session.

    Just as Californians find themselves increasingly controlled by climate warriors and anti-suburban ideologues, diverse Texans in cities like Austin now must conform to the dictates of strident demands by a “liberty caucus” that eerily resembles their authoritarian doppelgangers in Sacramento.

    In other cases, such as in North Carolina, social conservatives, like their Texan bedfellows, seek to circumscribe progressive policies in places like Raleigh or Charlotte. Businesses, in particular, are concerned that some bills, like the state’s transgender bathroom legislation, could lead to painful boycotts by corporations and event planners. Conversely, some blue-state policies, like high mandated minimum wages and policies restricting fossil fuels, hurt disproportionately poorer areas, like upstate New York and rural California, which have lost much of their political clout.

    Read the entire piece in the Los Angeles Daily News.

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

    Photo by LoneStarMike (Own work) [CC BY 3.0], via Wikimedia Commons

  • What’s the Future of Beleaguered Fossil Fuels Industry?

    Perhaps no economic issue — even trade — is as divisive as the energy industry. Once a standard driver of economic progress, the conventional energy industry has become increasingly vilified by the national media, sued by blue state attorneys general and denounced throughout academia. Some suggest that the industry should be demonized and hounded much as occurred in the case of tobacco.

    Yet, is this attack entirely justified? Unlike tobacco, energy is a huge economic driver, and conventional fossil fuel industries employ roughly 2 million people nationally, while hosts of industries — notably agriculture, manufacturing and warehousing — depend on reasonable energy prices and consistent delivery. Overall, fossil fuels last year accounted for 81 percent of all U.S. energy consumption.

    The one great exception is California, long a major oil-producing state, where fossil fuels are about as popular as herpes. In order to enhance its obsession with promoting climate “leadership” — likely to reduce emissions globally by a mere 0.4 percent by 2030 — the state has declared war on this industry, even though most Californians still depend on the gooey stuff, particularly for transportation. Once, we produced a lot of fossil fuel, but now we import a majority of it from abroad, taking an economic asset and turning it into a permanent deficit.

    Doom or future boom?

    In the past, advocates for “green energy” tied their agenda to concerns over “peak oil,” suggesting that renewables will save us from dependence on an increasingly scarce resource. More recently, given the huge increase in U.S. energy production, the argument has shifted to the notion that there’s too much oil, and that prices will not support the industry.

    Others suggest that the industry be undermined for environmental reasons. Yet, the reality is that most advanced countries — and developing countries even more so — depend heavily on coal, oil and gas. Some of these countries, like China, talk a good game, but continue to construct ever more coal plants, seek to buy more oil, including from the United States, and nurture an expanding automobile sector.

    Seeing the demand, frackers and offshore drillers have reason to stay in the game. Indeed, according to some projections, an improving global economy and a decline in production from the energy bust will drive prices up, perhaps to well over $100 a barrel, within the next three years.

    Prospects for energy-related development have been improved by the ascendency of the Trump administration, which has a strong fossil fuel constituency. Energy Secretary and former Texas Gov. Rick Perry wants to make the U.S. “dominant” in the global energy market. Increasing U.S. energy production also plays an important geopolitical role in challenging the power of global menaces such as Russia, Saudi Arabia, Iran and Venezuela.

    Read the entire piece at The Orange County Register.

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

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

  • Why the Greens Lost, and Trump Won

    When President Trump pulled out of the Paris climate accords, embraced coal, and stacked his administration from people from fossil-fuel producing states, the environmental movement reacted with near-apocalyptic fear and fury. They would have been better off beginning to understand precisely why the country has become so indifferent to their cause, as evidenced by the victory not only of Trump but of unsympathetic Republicans at every level of government.

    Yet there’s been little soul-searching among green activists and donors, or in the generally pliant media since November about how decades of exaggerated concerns—about peak oil, the “population bomb,” and even, a few decades back, global cooling—and demands for economic, social, and political sacrifices from the masses have damaged their movement.

    The New Religion and the Next Autocracy

    Not long ago, many greens still embraced pragmatic solutions—for example substituting abundant natural gas for coal—that have generated large reductions in greenhouse gas emissions. Rather than celebrate those demonstrable successes, many environmentalists began pushing for a total ban on the development of fossil fuels, including natural gas, irrespective of the costs or the impact on ordinary people.

    James Lovelock, who coined the term “Gaia,” notes that the green movement has morphed into “a religion” sometimes marginally tethered to reality. Rather than engage in vigorous debate, they insist that the “science is settled” meaning not only what the challenges are but also the only acceptable solutions to them. There’s about as much openness about goals and methods within the green lobby today as there was questioning the existence of God in Medieval Europe. With the Judeo-Christian and Asian belief systems in decline, particularly among the young, environmentalism offers “science” as the basis of a new theology.

    The believers at times seem more concerned in demonstrating their faith than in passing laws, winning elections or demonstrating results. So with Republicans controlling the federal government, greens are cheering Democratic state attorney generals’ long-shot legal cases against oil companies. The New York Times’ Thomas Friedman has talked about dismissing the disorder of democracy as not suited to meeting the environmental challenges we face, and replacing it with rulers like the “reasonably enlightened group of people” who run the Chinese dictatorship.

    After Trump pulled the U.S. out of the Paris climate accord, China was praised, bizarrely, as the great green hope. The Middle Kingdom, though, is the world’s biggest and fastest grower emitter, generating coal energy at record levels. It won’t, under Paris, need to cut its emissions till 2030. Largely ignored is the fact that America, due largely to natural gas replacing coal, has been leading the world in GHG reductions.

    Among many greens, and their supports, performance seems to mean less than proper genuflecting; the Paris accords, so beloved by the green establishment, will make little impact on the actual climate, as both rational skeptics like Bjorn Lomborg and true believers like NASA’s James Hanson agree. In this context, support for Paris represents the ultimate in “virtue signaling.” Ave Maria, Gaia.

    The California Model

    The cutting edge for green soft authoritarianism, and likely model after the inevitable collapse of the Trump regime, lies in California. On his recent trip with China, Brown fervently kowtowed to President Xi Jinping. Brown’s environmental obsessions also seems to have let loose his own inner authoritarian, as when he recently touted “the coercive power of the state.”

    Coercion has its consequences. California has imposed, largely in the name of climate change, severe land use controls that have helped make the state among the most unaffordable in the nation, driving homeownership rates to the lowest levels since the 1940s, and leaving the Golden State with the nation’s highest poverty rate.

    The biggest losers from Brown’s policies have been traditional blue collar, energy-intensive industries such as home building, manufacturing, and energy. Brown’s climate policies have boosted energy prices and made gas in oil-rich California about the most expensive in the nation. That doesn’t mean much to the affluent Tesla-driving living in the state’s more temperate coast, but it’s forced many poor and middle-class people in the state’s less temperate interior into “energy poverty,” according to one recent study.

    That, too, fits the climatista’s agenda, which revolves around social engineering designed to shift people from predominately suburban environments to dense, urban and transit dependent ones. The state’s crowded freeway are not be expanded due to a mandated “road diet,” while local officials repeatedly seek to reduce lanes and “calm traffic” on what are already agonizing congested streets. In this shift, market forces and consumer preferences are rarely considered, one reason these policies have stimulated much local opposition—and not only from the state’s few remaining conservatives.

    California’s greens ambitions even extend to eating habits. Brown has already assaulted the beef producers for their cattle’s flatulence. Regulators in the Bay Area and local environmental activists are proposing people shift to meatless meals. Green lobbyists have already convinced some Oakland school districts to take meat off the menu. OK with me, if I get the hamburger or taco-truck franchise next to school when the kids get out.

    Sadly, many of these often socially harmful policies may do very little to address the problem associated with climate change. California’s draconian policies fail to actually do anything for the actual climate, given the state’s already low carbon footprint and the impact of people and firms moving to places where generally they expand their carbon footprint. Much of this has taken on the character of a passion play that shows how California is leading us to the green millennium.

    Goodbye to the Family

    An even bigger ambition of the green movement—reflecting concerns from its earliest days—has been to reduce the number of children, particularly in developed countries. Grist’s Lisa Hymas has suggested that it’s better to have babies in Bangladesh than America because they don’t end up creating as many emissions as their more fortunate counterparts. Hymas’ ideal is to have people become GINKs—green inclinations, no kids.

    Many green activists argue that birth rates need to be driven down so warming will not “fry” the planet. Genial Bill Nye, science guy, has raised the idea of enforced limits on producing children in high-income countries. This seems odd since the U.S. already is experiencing record-low fertility rates, a phenomenon in almost all advanced economies, with some falling to as little as half the “replacement rate” needed to maintain the current population. In these countries, aging populations and shrinking workforces may mean government defaults over the coming decades.

    The demographic shift, hailed and promoted by greens, is also creating a kind of post-familial politics. Like Jerry Brown himself, many European leaders—in France, Germany, Sweden, the United Kingdom, and the Netherlands—are themselves childless. Their attitude, enshrined in a EU document as “no kids, no problem” represents a breathtaking shift in human affairs; it’s one thing to talk a good game about protecting the “next generation” in the collective abstract, another to experience being personally responsible for the future of another, initially helpless, human being.

    Do As We Say, Not How We Live

    The pressing need to change people’s lives seems intrinsic now to green theology. Without penance and penalties, after all, there is no redemption from original sin. In the process, it seems to matter little if we undermine the great achievements of our bourgeois economy—expanded homeownership, greater personal mobility, the ability to rise to a higher class—if it signals our commitment to achieve a more earth-friendly existence.

    The left-wing theorist Jedidiah Purdy has noted that “mainstream environmentalism overemphasizes elite advocacy” at the expense of issues of economic equity, a weakness that both Trump and the GOP have exploited successfully, particularly in the Midwest, the South, and Intermountain West. Some greens object even to the idea of GDP growth at a time when most Americans are seeing their standard of living drop. No surprise then that the green agenda has yet to emerge from the basement of public priorities, which remain focused on such mundanities as better jobs, public safety, and decent housing.

    To further alienate voters, many green scolds live far more lavishly than the people they are urging to cut back. Greens have won over a good portion of the corporate elite, many of whom see profit in the transformation as they reap subsidies for “green” energy, expensive and often ineffective transit and exorbitant high-density housing. Most notable are the tech oligarchs, clustered in ultra-green Seattle and the Bay Area, who depend on massive amounts of electricity to run their devices, but have reaped huge subsidies for green energy.

    The tech oligarchs have little interest in family friendly suburbs, preferring the model of prolonged adolescence in largely childless places like college campuses and San Francisco. Oligarchs such as Mark Zuckerberg live in spacious and numerous houses, even while pressing policies that would push everyone without such a fortune to downsize. Richard Branson, another prominent green supporter, may not like working people’s SUVs, but he’s more than willing to sponsor climate change events on a remote Caribbean island reachable only by private plane. One does not even need to plumb the hypocrisy of Al Gore’s jet-setting luxurious lifestyle.

    In the manner of Medieval indulgences these mega emissions-generators claim to pay for their carbon sins by activism, buying rain forests and other noble gestures. Hollywood, as usual, is particularly absurd, with people like Leonardo di Caprio flying in his private jet across country on a weekly basis. Living in Malibu, Avatar director James Cameron sees skeptics as “boneheads” who will have “to be answerable” for their dissidence, suggesting perhaps a shootout at high noon.

    In the end, the greens and their wealthy bankrollers may find it difficult to prevail as long as their agenda makes people poorer, more subservient, and more miserable; this disconnect is, in part, why the awful Donald Trump is now in the White House. Making progress on climate change, and other environmental concerns, remains a critical priority, but it needs to explore ways humans, through ingenuity and innovation, can meet these challenges without undermining what’s left of our middle class and faded democratic virtue.

    This piece originally appeared on the Daily Beast.

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

    Photo by Joe Flood, via Flickr, using CC License.

  • Texas Way of Urbanism

    Texas cities may well be the cutting edge of American urban life. Here are two videos by Amanda Horvath that reflect the reporting done in the recent Texas Way of Urbanism report from the Center for Opportunity Urbanism.

    One of these videos deals with San Antonio, the other Austin.

  • High-Flying California Charts Its Own Path — Is A Cliff Ahead?

    As its economy bounced back from the Great Recession, California emerged as a progressive role model, with New York Times columnist Paul Krugman arguing that the state’s “success” was proof of the superiority of a high tax, high regulation economy. Some have even embraced the notion that California should secede to form its own more perfect union.

    Pumped up by all the love, California’s leaders have taken it upon themselves to act essentially as if they were running their own nation. In reaction to President Trump’s abandonment of the Paris accords, Gov. Jerry Brown trekked to Beijing to show climate solidarity with President Xi, whose country is by far the world’s largest greenhouse gas emitter and still burns coal at record rates, but mouths all the right climate rhetoric.

    At the same time California’s Attorney General is spending millions to protect undocumented workers and there’s legislation being proposed to transform the entire place into a “sanctuary state.” Sacramento also recently banned travel by government workers to Texas and seven other states that fail to follow the California line on gay and transgender rights.

    Past performance and future trajectory

    When progressive journalists, including those in Texas, speak about the California model, they usually refer to the state’s economic performance since 2010, which has been well above the national average. Yet this may have been only an aberrant phenomenon. Since 2010, Texas’ job count has grown by 20.6 percent compared to 18.6 percent for California. If you pull the curtain even further, to 2000, however, the gap is even bigger, with employment growing 32.7 percent in Texas compared to 18 percent in California.

    The main problem is that California’s once remarkably varied and vital economy has become dangerously dependent on the Bay Area tech boom. Since 2010, the Silicon Valley-San Jose economy and San Francisco have been on a tear, growing their employment base by 25 percent. Job growth in the rest of the state has been a more modest 15 percent. “It’s not a California miracle, but really should be called a Silicon Valley miracle,” notes Chapman University forecaster Jim Doti. “The rest of the state really isn’t doing well.”

    Tech starts to slow

    Such dependency poses dangers. The tech economy is very volatile, and now seems overdue for a major correction. People tend to forget the depth of the tech bust at the turn of the century. If you go back to 2000, San Jose’s job growth rate is among the lowest in the state, less than half the state average.

    Now tech is clearly slowing – job growth in the information sector has slowed over the past year from almost 10 percent to under 2 percent. Particularly hard-hit is high-tech startup formation, down almost half in the first quarter from two years ago; the National Venture Capital Association reported that the number of deals in the quarter was the lowest since the third quarter of 2010.

    The growing hegemony of a few very large firms – chiefly Apple, Google and Facebook — has created a very difficult environment for upstarts. As one recent paper demonstrates, these “super platforms” depress competition, squeeze suppliers and reduce opportunities for potential rivals, much as the monopolists of the late 19th century did.

    And as we found in our recent survey of the hot spots for high wage professional business services jobs, last year’s growth rates for this critical middle class sector in Silicon Valley and San Francisco lagged considerably behind those of boomtowns such as Nashville, Dallas, Austin, Orlando, San Antonio, Salt Lake City and Charlotte. Most other California metro areas, including Los Angeles, have languished in the bottom half of the rankings. These trends suggest that the state’s job performance will at least drop to the national average over the next two years and perhaps below, says California Lutheran University forecaster Matthew Fienup.

    Rising inequality

    California is home to a large chunk of the world’s richest people and particularly dominates the list of billionaires under 40. Yet, by one new measure introduced by the Census Bureau last year, the state also suffers the nation’s highest poverty rate; while a 2015 United Way study found that close to one in three Californians were barely able to pay their bills. No surprise then that as of 2015, the state was the most unequal in the nation, according to the Social Science Research Council.

    As of 2011, nearly half of the 16 counties with the highest percentages of people earning over $190,000 annually were located in California but denizens of the state’s interior have done far worse. A 2015 report found California was home to a remarkable 77 of the country’s 297 most “economically challenged,” cities based on levels of poverty and employment. Altogether these cities had a population of more than 12 million in 2010, roughly one third of the state at the time. Six of the ten metropolitan areas in the country with the highest percentage of jobless are located in the central and eastern parts of the state.

    What is disappearing faster than any state, according to a survey last year, is California’s middle class, a pattern also seen in a recent Pew study. One clear sign of middle class decline: California’s homeownership rates now rank among the lowest in the nation and Los Angeles-Orange County, the state’s largest metropolitan area, suffers the lowest level of homeownership of any major region.

    Jerry’s Jihad and its consequences

    State policies tied to Jerry Brown’s climate jihad have widened these divides. Inland Empire economist John Husing asserts that Brown has placed California “at war“ with blue-collar industries like home building, energy, agriculture and manufacturing. These jobs are critical for regions where almost half the workforce has a high school education or less.

    Richard Chapman, President and CEO of the economic development arm of Kern County, an area dependent on these industries, complains that most polices promulgated in Sacramento — from water and energy regulations to the embrace of sanctuary status and a $15 an hour minimum wage — give little consideration given to the needs of the interior. “We don’t have seats at the table,” he laments. “We are a flyover state within a state.”

    The recent legislation to raise the minimum wage to $15 an hour will have more severe ramifications for less affluent areas than San Francisco. As for climate policies, the state no longer even assesses the economic implications. Yet the state’s costly renewable energy mandates make a lot of difference in the less temperate interior when energy prices are 50 percent rise above neighboring states. A recent study found that the average summer electric bill in rich, liberal and temperate Marin County was $250 a month, while in the impoverished, hotter Central Valley communities, where air conditioners are a necessity, the average bill was twice as high. Some one million Californians, many in the state’s hotter interior, were driven into “energy poverty,” a 2012 Manhattan Institute study stated.

    Housing has arguably emerged as the biggest force accentuating inequality. Environmental restrictions that have cramped home production of all kinds, particularly the building of affordable single-family homes on the periphery. The ever increasing restrictions have made the state among the most unaffordable in the nation, driving homeownership rates to the lowest levels since the 1940s. New “zero emissions” housing policies alone are likely to boost the already bloated cost of new construction by tens of thousands of dollars per home.

    Demographic crisis looms

    In much of California, particularly along the south coast, the number of children has dropped sharply. Since 2000, there has been a precipitous 13.6 percent drop in the number of residents under 17 in Los Angeles, while that number has remained flat in the Bay Area. In contrast, there has been 20 percent growth or better in the under 17 population in more affordable metropolitan areas such as Dallas-Fort Worth, Atlanta, Charlotte, Raleigh, Phoenix and San Antonio.

    Housing prices, in part driven by state and regional regulation, are gradually sending the seed corn — younger workers — to more affordable places. Despite claims that people leaving California are old and poor, the two most recent year’s data from the IRS shows larger net losses of people in the 35 to 54 age group. Losses were particularly marked among those making between $100,000 and $200,000 annually.

    Young people particularly are on the way out. California boomers, as we discussed in a recent Chapman University report, have a homeownership rate around the national average but the state has the third lowest home ownership rate in the nation for people 25 to 34, behind just New York and Washington. The drop among this demographic in San Jose and the Los Angeles areas since 1990 are roughly twice the national average and a recent San Jose Mercury News poll found nearly half of all Bay Area millennials planning to move, mostly motivated by housing and costs. The one population on the upswing in the state are seniors, particularly in the coastal countries, who bought their homes when they were much less expensive.

    As long as home prices stay high, and opportunities for high-wage employment highly limited, the state will continue to suffer net domestic migration outflows, as it has for the last 22 of the past 25 years. Given that the state’s birthrate is also at a historic low and immigration from abroad has slowed, there’s a looming shortage of new workers. Between 2013 and 2025 the number of California high school graduates is expected to drop by 5 percent compared to a 19 percent increase in Texas, 10 percent growth in Florida and a 9 percent increase in North Carolina.

    And for what?

    Of course, many environmental activists generally prefer smaller families to cut greenhouse gas emissions; smaller families also serve the needs of developers of high-density housing, who might prefer that younger people remain long-term adolescents.

    Sadly, many of these climate policies, which cause so much damage, won’t have much of an impact on the actual climate unless the rest of the country adopts similar measures. This stems from the state’s already low carbon footprint and the impact of people as well as firms moving elsewhere, where they usually expand their carbon footprint. Nor does densification make sense as a climate antidote, given the rising temperatures associated with “urban heat islands.”

    The tech boom has been used to justify Sacramento’s crushing regulatory and tax regime. It has also made it possible for apologists to ignore some 10,000 businesses that have left or expanded outside the state, many of them employing middle and working class people.

    Ultimately California’s growing class bifurcation will demand solutions. Hedge fund billionaire-turned green patriarch Tom Steyer now insists that, to reverse our worsening inequality, we should double down on environmental and land use regulation but make up for it by boosting subsidies for the struggling poor and middle class. Certainly the welfare state in California — home to over 30 percent of United States’ on public assistance as of 2012 — will have to expand if the state stays on its present course.

    In the coming years the state’s business leaders fear an ever more leftist, and fiscally damaging, regime after the departure of the somewhat frugal Brown. There are increased calls in Sacramento for new subsidized housing, a single payer healthcare system as well as a big boost to the minimum wage already enacted.

    Ultimately California will pay — demographically, economically and socially — from its current surfeit of good intentions. Those who already own houses will not suffer immediately, but the new generation, immigrants and minorities will face an increasingly impossible burden. With its unparalleled natural assets, and economic legacy, California may be able to survive this toxic policy mix better than most places, but even in the Golden State reality has a way of showing its ugly face.

    This piece originally appeared on Forbes.

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

    Photo by Neon Tommy, via Flickr, using CC License.