New Geography

Author: Joel Kotkin

  • America Down But Not Out

    America, seen either from here or from abroad, doesn’t look so good these days. The country that maintained world peace for decades now “leads by behind,” or not at all. You don’t have to have nostalgia for George W. Bush’s foreign policy to wish for someone in the White House who at least belongs in the same room with the likes of Vladimir Putin. Some wags now suggest that President Barack Obama has exceeded Jimmy Carter in foreign policy incompetence – Carter certainly was more effective in the Middle East.

    What about space? Remember, we won the space race but now have to depend on Russian launch vehicles to do much of anything in orbit. President Obama thought we could rely on the Russians to provide us with cheap rides into orbit, but Putin squashed that notion after we objected to his actions in Ukraine. John Kennedy must be turning over in his grave.

    And as for our domestic economy, the best you can say is “It could be worse,” particularly if you look at what’s happening in torpid Europe. It’s a sign of our utter lack of confidence that the current administration, and much of the punditry, still thinks we should follow the Continent’s economic and social policies.

    Yet, despite all these challenges – and two presidencies the public ranks among the worst in history – it’s far too early to write off the United States. After all, no one else is doing very well. Even the widely touted BRICS countries – Brazil, Russia, India, China and South Africa – face slowing growth and mounting social problems.

    There are several factors that help explain why the USA’s long-term prospects are better than many Americans may assume.

    Entrepreneurial edge

    The essential strength of the U.S. economy has rested on having two things that rarely occur together – an innovative culture combined with massive natural resources. Whole industries, notably technology, years ago thought to be lost to Japanese and other Asian competitors, have recentralized in the United States. In 1990, six of the world’s top 10 semiconductor companies were Japanese; by 2011, five U.S. chip companies dominated the top 10, which included only two Japanese companies, Toshiba and Renesas. And their combined revenue in 2012 was less than half that of world leader Intel’s $49.7 billion.

    As of now, there’s not a key technology sector where the U.S. is not in the lead. We dominate social media, software and biotechnology. In fact, about the biggest technical threat we face is from the administration’s bizarre desire to surrender control of the Internet to foreign countries, many of whom, the president may acknowledge, do not share our values or relish our current predominance. Over time, to be sure, there will be challengers, notably China, South Korea and India, but none are likely to gain predominance in the near future. The same can be said in media; Hollywood still reigns supreme and U.S. dominance in fashion, lifestyle and music remains mostly in place.

    The advantage of size

    Other important countries are geographically large, but none – apart from Australia or Canada – is particularly rich. Russia is an oil plutocracy but beyond energy and weapons doesn’t export much else. China has a large land mass, but less resources, and its ability to feed itself will be increasingly constrained by pollution and diminishing water supplies. The country, by some estimates, has lost 28,000 rivers.

    In contrast, America has a huge agricultural base, spread across a vast continent. If California goes dry for a spell, for instance, there’s lots of water and fertile soil in the northern Plains, the Southeast, the Midwest and parts of the Northwest. Size is a form of arbitrage that allows production to move from one place to another. Others are investing heavily in farm land and other real estate, evidence not of American decline, but, instead, of the patterns of investment that led to the country’s great expansion in the 19th century.

    The energy revolution

    The United States could be on the cusp of another period of broad-based industrial expansion, spurred, in part, by its rapidly growing natural gas and oil production. The current energy and industrial boom, notes Joe Kaeser, president of the German multinational conglomerate Siemens, “is a once-in-a-lifetime moment.” Cheap and abundant natural gas is luring investment from manufacturers in Europe and Asia, who now must depend on often-insecure and more expensive sources of energy.

    The energy revolution has helped spark an industrial boom. There is already a shortfall, notes a recent Boston Consulting Group study, of some 100,000 skilled manufacturing positions in the U.S. By 2020, according to BCG and the government’s Bureau of Labor Statistics, the nation could face a shortfall of around 875,000 machinists, welders, industrial-machinery operators and other highly skilled manufacturing professionals.

    New capitalist revolution needed

    America’s capacity for perpetual renewal – what one Japanese scholar Fuji Kamiya calledsokojikara, a latent power to overcome seemingly insurmountable obstacles – persists but is limited by our political leadership in both parties as well as misguided economic policies. We need to alter contemporary capitalism’s tendency to favor and encourage transactions among investors and asset inflation, rather than fostering broad-based growth that rewards people adequately for their labor.

    Fortunately, the capitalist system, particularly one under democratic control, allows for the possibility of reform, as occurred in 19th century Britain and early 20th century America. What is needed now is structural reform that can shift priorities away from rent-seeking and towards true wealth creation.

    One clear priority is to reduce “financialization” of the economy. Over the past three decades, financial-services firms have doubled their share of the economy. The Obama recovery, with its bailouts of large banks and free-money policies for investors, has accelerated this trend, as companies have tended to be slow to reinvest profits in new products and innovations, preferring, instead, to engage in mergers or stock buybacks that raise share prices and reward investors, but do little for the overall economy.

    In contrast, financial institutions often regard productive industries – notably manufacturing – as hampering short-term financial gains. This has repeatedly pushed companies to strip their industrial assets, typically moving them overseas.

    Reforming capitalism toward a broader and more inclusive focus may not appeal to some – Wall Street investors, speculators in high-end real estate and tech oligarchs – who have done just fine the past five years. But, when asked what mattered more to them, most Americans preferred economic growth to redistribution, noted a 2014 studyconducted by the Global Strategy group, a Democratic consulting firm.

    Polls of popular opinion in the United States and the United Kingdom find key ecological concerns, such as climate change, well down the list, behind such issues as the economy, immigration, crime, unemployment and even the state of morality. What Americans want most, notes political commentator Mike Barone, is “an economic boom.”

    Such a broad-based economic boom is necessary if we are to restore America’s promise for this generation and, more importantly, the next. The country still has all the requisite advantages to lead in the next century and restore the middle class – if only the political leaders either rise to the occasion, or get thrown out.

    This article first appeared in the Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    USA map image by BigStockPhoto.

  • Growth, Not Redistribution the Cure for Income Inequality

    Ever since the publication this spring of Thomas Piketty’s book “Capital in the 21st Century,” conservatives and much of the business press, such as the Financial Times, have been on a jihad to discredit the author and his findings about increased income inequality in Western societies. Some have even equated growing attacks on inequality with anti-Semitism, with at least one Silicon Valley venture capitalist, Tom Perkins, comparing anti-inequality campaigners to Nazis.

    For their part, progressives have taken to embracing the book like acolytes who have found a new gospel for their talking points. Paul Krugman predictably describes the bookas “the most important economics book of the year – and, maybe, the decade.”

    Piketty’s book is neither the Sermon on the Mount nor the “Communist Manifesto.” Its findings are, to be sure, far from conclusive, and may well have omitted some relevant points. The French economist’s solutions, as we will discuss, are also wanting. But conservatives, and business interests, should not see these shortcomings as a “get out of jail free” card on the pressing issues of class, inequality and reduced upward mobility.

    Conservatives, Businesses Need to Wake Up

    There are numerous measurements of reduced upward mobility from many other sources, notably the Federal Reserve, which are based on different data sets. Virtually all the conclusions are stark: The middle-class share of the economy is dropping as the vast majority of new dollars flow into the hands of a relative few.

    During the recovery from the Great Recession, income among the three middle quintilesdropped by 1.2 percent, while those of the top 5 percent of incomes grew by over 5 percent. This represents the acceleration of a long-term trend. Overall, the middle 60 percent of Americans have seen their share of the national pie fall from 53 percent in 1970 to barely 45 percent in 2012.

    More important, still, may be perceptions. Conservative economists can scoff at Piketty’s findings, but more and more Americans are alienated from the current economic system. For many, according to a 2013 Bloomberg poll, the American Dream seems increasingly out of reach. This opinion prevails by a 2-1 margin among Americans, rising to 3-1 among those making under $50,000 a year, but also is held by a majority earning over $100,000.

    At the same time, Americans, by more than 2-1, believe they enjoy fewer economic opportunities than did their parents and feel they will experience far less job security and disposable income. They also see growing ties between powerful business interests and government, with the vast majority feeling that government contracts go to the well-connected. Less than one-third believe the country operates under a free-market system.

    For business and for free-market conservatives these attitudes have consequences.Nearly 60 percent of the public, notes Gallup, favor some steps to increase the redistribution of wealth, almost twice as many who felt the current system was “fair.” Sentiments in this direction are even stronger among millennials, with some surveys suggesting that the majority are even sympathetic to socialism. Business needs to learn this lesson: Capitalism can only be sustained if it achieves a semblance of social democratic aims; without this, the system loses credibility and is seen as more oppressive than liberating.

    Good news for Democrats

    All this could be considered good news for Democrats, particularly the party’s left wing, which has gained growing sway over the party, particularly in urban areas. But there’s this problem with the Obama record: Rather than a shift to a more broad distribution of income, some 95 percent of the income gains during President Obama’s first term went to barely 1 percent of the population while incomes declined for the lower 93 percent of earners. As one writer at the left-leaning Huffington Post put it, “The rising tide has lifted fewer boats during the Obama years – and the ones it’s lifted have been mostly yachts.”

    Leftist reaction to this failure has been building in recent years, not only during the Occupy movement, but in the increasingly open criticism of the Obama approach by populist – as opposed to gentry – liberals. Progressives, such as Massachusetts U.S. Sen. Elizabeth Warren, have made it clear that, on this issue, at least, the administration has had few, if any, answers.

    Searching for Solutions

    This leads us into what could be “terra incognita.” Over the past several decades, we have seen two basic approaches to economic policy. One approach can be called “trickle down,” with tax cuts designed particularly to provide incentives for investors.

    Obama has tried a different approach, imposing higher taxes on upper-income professionals and small-business owners (while not touching the lower capital-gains rate for the very rich) as well as a regulatory regime particularly tough on firms without a strong lobbying presence.

    The failure of the Obama approach convinces some of the Left that the solution lies with the expanded “social state” advocated by their new guru, Piketty, steps which, they hope, will forcibly redistribute wealth. Like Piketty, they seem to feel that economic growth, traditionally a prime source of social uplift, is little more than an “illusory” solution.

    In reality, redistribution by the state would certainly help some, notably lower-income workers, but it’s doubtful it would improve material conditions for much of the middle class or the poor. Such a state is unlikely to increase upward mobility. The 50-year “war on poverty” in the United States, for example, initially helped reduce the percentage of the poor, but has achieved few gains since the 1960s.

    Despite $750 billion spent annually on welfare programs, up 30 percent since 2008, a record 46 million Americans were in poverty in 2012. Indeed, racial and ethnic economic disparities have grown under Obama.

    In much the same way, the European welfare state – held up as an exemplar by many progressives – has fallen on hard times, attracting the lowest levels of political support in several decades. Certainly, it holds little hope for young people, whose interests wane before a government increasingly focused on the growing ranks of pensioners. Overall unemployment rates in Europe are generally higher than in the U.S., and particularly for the young, where joblessness reaches 20 percent and higher in some countries. Indeed, much of the continent’s youth are widely described as “the lost generation.”

    Pervasive inequality and limited social mobility have been well-documented in larger European countries, including France, which has among the world’s most-evolved welfare states. The same is true in Scandinavia, often held up as the ultimate exemplar of egalitarianism. The Nordic countries have much to recommend them, but they, too, face rapidly growing inequality. Indeed, over the past 15 years, the gap between the wealthy and other classes has increased in Sweden four times more rapidly than in the United States.

    Ultimately, expanding welfare states, which can ameliorate class inequality, also depress economies and create the conditions for social stagnation. Indeed, as New Deal architect Franklin Roosevelt warned, a system of unearned payments, no matter how well-intended, can serve as “a narcotic, a subtle destroyer of the human spirit” by reducing people’s incentives to better their lives.

    In contrast, significant gains in poverty reduction, among those employed, at least, have come when both the economy and the job market expand, as occurred during both the Reagan and Clinton eras. Clearly, as both of these presidents recognized, the best antidote to poverty remains a robust job market. As Mike Barone has pointed out, the best economic results for the middle class have come under either free-market leaders like Reagan or Margaret Thatcher, or moderate liberals, like Clinton or Tony Blair.

    What we need, then, is a new focus on economic growth, accompanied by tax changes that both allow marginal rates to fall while equalizing capital gains with income taxes. This would lower the increasingly onerous burden on small businesses and middle-class families, and spark more grass-roots “up from the bottom” growth. It would also shift the economic paradigm away from speculative investment and toward rewarding work and enterprise. Critically, it could slow, perhaps reverse, the precipitous drop in labor force participation rates, particularly among young Americans, a harbinger of Europeanization in the worst sense.

    We should neither dismiss the issue of inequality, as many conservatives might wish to, or take the wrong steps to address it. Americans need to have a serious debate on how to confront the most important issue of our times – the growing class divide – with not just ceaseless rhetoric from the political class that, for the most part, to recall Shakespeare’s “MacBeth,” “is full of sound and fury, signifying nothing.”

    This article first appeared in the Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

  • There Will Be No Real Recovery Without The Middle Class

    What if they gave a recovery, and the middle class were never invited? Well, that’s an experiment we are running now, and, even with the recent strengthening of the jobs market, it’s not looking very good.

    Over the last five years, Wall Street and the investor class have been on a bull run, but the economy has been, at best, torpid for the vast majority of the population. Despite blather about our “democratic capitalism,” stock ownership is increasingly concentrated with the wealthy as the middle class retrenches. The big returns that hedge funds, real estate trusts or venture capitalist receive are simply outside the reach of the vast majority.

    A recent study by the Russell Sage Foundation suggests these patterns of inequality, which have been developing over the last several decades, have become more pronounced in the post-Recession years. In 2013 the wealth of those at the 90th and 95thpercentiles was actually higher than 10 years ago. Everyone else is lower.

    The labor market may be strengthening, with the unemployment rate falling to 6.1% last month, but too many of the new jobs are low wage or part time. They aren’t providing the kick the economy got in the last, more broad-based expansion from robust consumer spending.

    Wage growth has been weak, rising 2.5% annually since 2009, according to Bloomberg, compared with a 4.3% annual rise from 2001 to 2007. Consumer spending, which makes up roughly 70% of the economy, has expanded an average 2.2% since the recession ended, behind the 3% advance in the prior expansion.

    And many working-age people are still sitting discouraged on the sidelines – the labor force participation rate remains the lowest since 1979.

    People in marginal or part-time jobs are not likely to drive consumer spending. Instead we have seen the emergence of a new, top-heavy consumer market. Since 1992 the top 5% of households have increased their share of total spending to almost 40%, up from 27% in 1992.

    Former Citigroup economist Anjay Kapur has described this situation as a “plutonomy,” in which the economy is increasingly based on the global wealthy and their tastes and predilections.

    Meanwhile broader consumer confidence remains weak. Last year some two-thirds of Americans polled by the Washington Post and the Miller Center said they felt life had become tougher over the last five years compared to just 7% who thought theirs had improved. Pollsters also have found almost two-thirds of parents felt their children would do worse in life, a stunning shift from far more optimistic readings back in 1999.

    The Housing Market

    Historically housing has been the primary asset held by the middle and working class. Despite government efforts to keep mortgages affordable, post-crash, growth has been slow, and much of the buying restricted to investors, including major financial interests. Particularly damaging, there has been a marked decline in the “trade up market” and even more so, sales to first-time buyers, whose share of the market has declined to under 30%, well below the historic average of 40%. This reflects the weak economy, tighter lending standards, and, for younger customers, the heavy burden of student loans.

    Some on Wall Street hope to profit from a perceived shift in America to a “rentership society.” Housing more of the population in rental apartments would do little to improve social mobility, as people end up working not for their own equity but to pay the mortgage of their landlords. Nor can the economic payoff from apartment construction come close to that of single-family homes. According to the National Association of Home Builders, building 100 new single-family homes adds 324 jobs to the average metropolitan economy in the year of their construction and 53 jobs annually in the following years. This compares to 122 jobs per 100 new apartments in the year of construction and 32 in the following years. With home starts at less than a third their 2005 level, lack of construction employment also deals a body blow to one of the primary sources of higher-paying blue collar jobs.

    The Emasculation Of Small Business

    In previous recoveries, small businesses have provided much of the spark and job creation. Not so this time. Small business start-ups have declined as a portion of all business growth from 50% in the early 1980s to 35% in 2010, while its share of employment dropped down from 20% to 12%. Indeed, a 2014 Brookings report 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.

    Nor is the future prognosis too good. The rise of the regulatory state, including the Affordable Care Act and higher taxes, amplified in deep blue states such as California, has hit smaller businesses hard. The gradual culling of smaller banks, traditional lenders to entrepreneurs, and the growing concentration of assets in the “too big to fail” banks, historically unfocused on the needs of small companies or individual proprietors, suggests credit may remain tough for grassroots entrepreneurs.

    Needed: A New Paradigm

    The recession and the weak recovery have taught us you cannot have strong economic growth without the participation of the vast majority of Americans. We’ve run an experiment under Bernanke, Bush and Obama to pump up the economy from above, and what we’ve done is squash the aspirations of those middle orders, particularly small business and the self-employed.

    This issue should be at the center of the political debate.  I would welcome suggestions from the right and left about how best to restart a broad-based economic recovery. The best ideas may come from across the spectrum, such as flatter taxes, supported by many conservatives, as well as new spending on major infrastructure projects as improved roads, rivers and ports that generally come from more liberal groups.

    The good news is the fundamentals for a broader-based prosperity, including the creation of high-paying blue-collar jobs, remain in place. Progress is already evident in the energy and some manufacturing-oriented regions. Restarting the housing sector — particularly the single-family home component — would do wonders for middle and working class people in many regional economies, as can be seen, for example, in Houston, where more homes will be built this year than in the entire state of California. Nationwide, the gap between  between demand and potential housing, according to the NAB, is roughly 1 million homes, which translates into close to 3 million jobs.

    How to drive growth to these and other productive sectors may require not only changes in government policy but also reacquainting the investor class with the virtues of long-term growth, productivity and the revival of the mass economy. Perhaps once they do investors might earn something other than intense dislike from the rest of the population.

    This story originally appeared at Forbes.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

  • One-party Rule is No Party in California

    Forty years ago, Mexico was a one-party dictatorship under the Partido Revolucionario Institucional, hobbled by slow growth, soaring inequality, endemic corruption and dead politics. California, in contrast, was considered a model American state, with a highly regarded Legislature, relatively clean politics, a competitive political process and a soaring economy.

    Today these roles are somewhat reversed, and not in a good way for the Golden State. To be sure, corruption remains endemic in Mexico, where the PRI ruled for some seven decades. But now, there is a vibrant, highly competitive political culture, with three strong parties and at least some movement toward economic reform. Thirty percent of Mexicans, according to Gallup, trust their federal government, a level not all that different than in the United States.

    But if Mexico’s governance can be seen as at least gradually improving, it’s more difficult to reach that conclusion about the Golden State. California is now a one-party state, with increased corruption and little to no willingness to reform its creaky, scarily unbalanced economy. Californians, by a large margin, think things are getting worse, rather than getting better.

    We can call this trend PRI-ization, and nowhere is it more evident than in our state’s increasingly torpid politics. As there is no real competition for power or for ideas, voter turnout, at both the local and state levels, has plummeted to the lowest levels on record. June’s primaries attracted barely 25 percent of the electorate, while the Los Angeles County turnout was just over 17 percent.

    When I voted this month in my San Fernando Valley precinct, I brought my 9-year-old daughter, but she didn’t get to see democracy in action. She saw an empty church basement with a bunch of pleasant election workers sitting around with not much to do.

    This lack of voter enthusiasm could be explained, in part, by a lack of competition between the parties statewide. But it goes deeper than that; even the nominally nonpartisan recent Los Angeles mayor’s race, while highly competitive, also broke modern records for low turnout.

    Monopolistic mess

    Let’s be frank. California’s democracy is fading, the result of one-party politics, a weak media culture and a sense among many that politicians in Sacramento (or city hall) will do whatever they please once in office. As under the old PRI in Mexico, a lack of competitive politics has also bred the kind of endemic corruption with which California, in recent decades, was not widely associated.

    The case of state Sen. Leland Yee, the Bay Area crusading liberal now accused of being a wannabe gun-runner, was just the most extreme example. If Yee is convicted and sent to jail, he might be joined by two Senate colleagues, one convicted of voter fraud and the other of bribery. The scandals have damaged the Legislature’s approval ratings.

    Republicans and conservatives tend to blame such embarrassments on Democrats, just as the long out-of-power outsiders linked Mexico’s corruption to the PRI monopoly. But, in many ways, it reflects the dynamic, also seen in Republican-dominated states, such asMississippi, or in Vladimir Putin’s Russia, of those who see no threat to their monopoly taking license to steal or otherwise abuse the law.

    Arguably more disturbing than petty corruption is the inability of our politicos, as during the PRI’s heyday, to confront serious challenges facing the state. Low voter turnouts basically mean politicians don’t have to answer to middle-class or working-class voters; instead, they listen mostly to outside special interests such as public employee unions, environmentalists and social-issue lobbies. Union members have an incentive to show up at the polls to protect their pay and pensions, and issue activists will vote for those who support their line. It just seems that the rest of us have given up.

    Perhaps the biggest shift in California’s balance of power is in the diminished role of business. In the days when California produced contending political giants – like the late Govs. Edmund G. “Pat” Brown and Ronald Reagan – businesses lined up on both sides of the aisle, albeit more on the Republican side – but there also was a strong contingent of “business” Democrats.

    Today, California business operates solely for the purposes of accommodating the economic agenda of an increasingly left-oriented Democratic Party; supporting an opposing party – or even more moderate Democrats – increasingly is no longer an option to influence policy.

    Mainstream doesn’t matter

    Indeed, one of the negative products of one-party politics has been an ever greater shift away from the political mainstream. With turnouts tiny and business largely gelded, the “base” of the ruling party tends to get its way. So, California gets to try being the greenest state in the land, even as much of the state lives in a virtual permanent recession. In the process, politics becomes ever more marginal, and ever less responsive to what is happening to the citizenry.

    We see much the same on the local level. Los Angeles, even much of its establishment admits, is becoming a “city in decline,” with the highest job losses, some 3.2 percent, of any of the 32 largest U.S. metro areas since 1990. But L.A. city and county leaders have little stomach for the reforms that would be necessary to turn the region around, in large part because it might offend their public employee paymasters. Fixing the potholes mightplease neighborhood residents, but since they mostly don’t vote, who cares?

    So instead of a tough problem solver, we have a mayor who likes to take “selfies” to show how “with it” he is, and a City Council that thinks ultraexpensive solar energy projectsand subsidizing Downtown hotels will actually turn around a torpid municipal economy. But such largesse will reward the special interests who build these systems, the unionized workers at the new hotels and speculators in Downtown real estate.

    None of this will do anything to help the Valley, East L.A., Watts or even the Westside.

    Chances for rebound?

    Sadly, it’s hard to see how this trend will turn around soon. Tax and regulatory policies are making the state toxic for many businesses and middle-class families. The number of poor, state-dependent voters grows, and business, outside of a few sectors, is stagnant or in decline. In the glory days of California politics, Democrats and Republicans vied for suburban middle-class voters; now, they don’t have to bother.

    This is all made worse by the descent of the Republicans into near irrelevancy. The GOP barely escaped nominating for governor a nativist, Tim Donnelly, who accused his Hindu opponent Neel Kashkari of wanting to import Shariah law. It might have occurred to Donnelly that Hinduism is very different from – and often in serious conflict with – Islamic fundamentalism.

    Until the Republicans develop some basic sense and offer a compelling social and economic message for an increasingly diverse state, they will remain bit players.

    Oddly, unless this trajectory is reversed, we may look back at this time and wax nostalgic about the Jerry Brown years; Brown may be a bit over-the-top on some issues, such as his dodgy high-speed rail plan, but at least he’s not mindlessly ideological.

    Just wait four years, when a full-bore true believer, the glamorous Attorney General Kamala Harris, could well become governor and tries to remake this amazing, diverse state into a more impoverished version of California’s real political capital, San Francisco. If business finds getting along with the somewhat mercurial Brown to be, literally, taxing, they will find the more pure-left regime that may follow him a far more onerous task.

    Ultimately, the only hope may come when the grand delusions of our political elites – financed by the social media bubble, the stock market and high-end real estate speculation – finally come crashing down. When there is no one left to tax, and no way to borrow more, and the shift elsewhere of high-wage employment too obvious, perhaps then middle-class and working-class Californians will demand alternatives to the status quo. At that point they might even find reasons to go to the polls again.

    This article first appeared in the Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    Photo: Troy Holden

  • Energy Preferences to Play Big Role in November

    The November election will be played out along all the usual social memes – from gay marriage, racism and immigration to the “war against women.” But what may determine the outcome revolves around one key economic issue: energy. This has all come to a boil now as President Obama has backed an Environmental Protection Agency effort to accelerate tougher emissions standards, something that could shutter hundreds of coal-fired power plants and slow fossil fuel development across the country.

    The energy issue has become in our era what tariffs were in the 19th century: an increasingly insurmountable partition that separates Americans by region and class and which, ultimately, touches on the long-term economic trajectory of the country.

    Of course, we have always had politics over energy – given regional variations in sources and kinds of supplies – but, until recently, both parties generally favored developing more oil and natural gas, largely because of the associated high-wage employment growth and potential for reducing the nation’s trade deficit. Now, energy increasingly has become a deeply partisan issue, with Democrats largely in opposition to fossil-fuel development and Republicans, fairly predictably, in support.

    Reflecting this trend has been the rise of opposing sets of contributors whose primary concerns are wrapped around energy. On the Republican side, energy industry contributors, including the billionaire industrialist Koch brothers, have become increasingly dominant. More than 90 percent of campaign donations from the oil and gas industries in 2012 went to Republicans.

    At the same time, environmentally focused Democratic contributors, led by hedge-fund manager Tom Steyer, have made being anti-fossil-fuel de rigueur for most candidates in the party. Steyer and his allies have become the favorite place to go for cash for Senate Majority Leader Harry Reid of Nevada and other top Democrats.

    The Geography of Energy

    The most-evident division – and most politically relevant – is geographic. A huge swath of the country, mainly along the Gulf Coast, Texas and the Great Plains, where shale-oil production has grown fourfold since 2007, is enjoying an energy boom that has created a surge in other high-wage, blue-collar fields such as manufacturing and construction. With the delays in approving the Keystone XL oil pipeline and looming new EPA emissions standards, Democratic senators and candidates from these states are, understandably, trying to distance themselves from their party’s increasingly anti-fossil-fuel policies.

    More significant, over time, may be how energy plays out in the country’s major political battleground, the rust-belt states. Most of these states are highly dependent on coal for electricity, and some, such as Pennsylvania, Ohio and West Virginia, are seeking to develop new oil and gas finds. Policies that limit fossil-fuel development, may prove a tough sell in some districts and could cost the Democrats several additional Senate seats.

    In contrast, the most fervent support for strict climate-change legislation comes mostly from states – notably, the Northeast – that produce little in the way of energy and use relatively little carbon to power their economies. These states need less power than other areas as they already have deindustrialized and have very little population growth.

    Two other ultrablue bastions, California and the Pacific Northwest, also advocate a green energy position. The Northwest relies largely on hydro power for its robust industrial sector, lessening dependence on carbon-based energy for electricity. California, itself rich in fossil fuels, largely disdains its resources, and its leaders prefer, for ideological reasons, to subsidize expensive renewable energy. Roughly one-fourth of all energy used in California comes from out of state, much of it from coal. But since this “dirty” power comes from elsewhere, the progressives in places like Hollywood and Silicon Valley can still feel good about our state’s “enlightened” policies, whatever their real effect.

    The Class Divide

    Historically, Democrats have been big supporters of expanding the energy sector, which includes such things as dams, nuclear power plants and pipelines. But the growing influence of the green movement has reversed that. Green policies are widely embraced by largely Democratic crony capitalists in places like Silicon Valley. They also enjoy almost universal support in academia, where boycotts of fossil-fuel companies are increasingly common. The media, too, is an ally, as is the predictably progressive entertainment industry.

    Rest assured, we will never see an HBO series that celebrates George Mitchell, the entrepreneur most responsible for developing fracking. But campus-climate scientists who diverge in any way from the party line on global warming are routinely excoriated as“deniers” of “settled” science, even in the face of 15 years of relatively stable global temperatures. The media has also become a fierce defender of climate orthodoxy. TheLos Angeles Times, as well as the website Reddit, have chosen to exclude contributions from skeptics.

    Of course, many traditional Democrats, notably in the construction trades and manufacturing, oppose this drift. Construction unions are apoplectic about the president’s endless delays on Keystone XL, which has two-thirds support from the public. The United Mineworkers, not surprisingly, oppose the new EPA emissions limits, claiming they will cost upward of 75,000 mining jobs.

    Some Ohio construction unions, incensed by green opposition to both Keystone and fracking, have shifted support to prodevelopment GOP Gov. John Kasich, despite his conflict with public employee groups. The only prominent national Democrat to identify as pro-fossil-fuel is former Montana governor Brian Schweitzer whose possible run for the presidential nomination seems a bit quixotic in a party increasing dominated by environmental activists and their gentry allies.

    What Kind of America do we want?

    Ultimately, the energy debate reflects a larger discussion about the future of the country and the economy. This is not merely about emissions and climate change, per se. California’s Draconian laws, even supporters admit, will have no appreciable effect on a global basis, particularly given the state’s already relatively low carbon footprint (largely a factor of the mild climate and the slow growth in its interior in recent years). Indeed, virtually all the world’s significant increases in CO2 are coming from developing countries; since 1990, China has increased its emissions almost threefold, while America’s have dropped. China now emits roughly twice as much greenhouse gas as the U.S.

    Some of the steps taken by environmental and renewable-energy interests against natural gas development can even be seen as counterproductive. The U.S.’s better recordon reducing emissions reflects overwhelmingly the shift from coal to natural gas for generating electricity, which has helped the U.S. reduce its carbon emissions more than either Asia or Europe.

    Fracking, like any energy technology – including wind and solar – clearly creates environmental problems. There should be strong rules to regulate fracking to make it safer, as Colorado’s Democratic Gov. John Hickenlooper has worked to pass in his state. In addition, major reductions can be achieved through a shift away from oil and coal and toward natural gas, as well as conservation efforts.

    Progressives, in particular, need to focus far more on what effects an ultrahigh-cost energy economy would have on the middle and working class. More attention should be paid in accelerating the current spike in job-creating foreign investment into the country, attracted in large part by the development of low-cost, clean natural gas. In contrast, policies hostile to fossil fuels will drive industry to less-environmentally conscious countries, particularly in the developing world.

    Sadly, none of this is necessary. America’s economic future is best guaranteed by marrying the successes of Silicon Valley and Hollywood with a robust blue-collar sector that includes fossil fuels, manufacturing, logistics and construction. Emissions can be cut, for the time being, by such steps as replacing coal for generating electricity, improving efficiencies, promoting telework and boosting the use of natural gas for transportation.

    Dividing the country, and the electorate, into totally polarized camps over energy may benefit the consultants in both camps who feed off contentious and expensive election campaigns, but will do little to help the futures of most Americans.

    This article first appeared in the Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    Photo by gfpeck

  • Dawn of the Age of Oligarchy: the Alliance between Government and the 1%

    When our current President was elected, many progressives saw the dawning of a new epoch, a more egalitarian and more just Age of Obama. Instead we have witnessed the emergence of the Age of Oligarchy.

    The outlines of this new epoch are clear in numerous ways. There is the diminished role for small business, greater concentration of financial assets, and a troubling decline in home ownership. On a cultural level, there is a general malaise about the prospect for upward mobility for future generations.

    Not everyone is suffering in this new age. For the entitled few, these have been the best of times. With ever more concentration of key industries, ever greater advantage of capital over labor, and soaring real estate values in swanky places such as Manhattan or San Francisco which , as one journalist put it, constitute “vast gated communities where the one percent reproduces itself.” The top hundred firms on the Fortune 500 list has revenues, in adjusted dollars, eight times those during the supposed big-business heyday of the 1960s.    

    This shift towards oligarchy well precedes President Obama’s tenure. It was born from a confluence of forces: globalization, the financialization of the economy, and the shift towards digital technology. Obama is not entirely to blame, it is more than a bit ironic that these measurements have worsened under an Administration that has proclaimed income inequality abhorrent.

    Obama’s Oligarchs

    Despite this administration’s occasional rhetorical flourishes against oligarchy, we have seen a rapid concentration of wealth and depressed conditions for the middle class under Obama. The stimulus, with its emphasis on public sector jobs, did little for Main Street. And under the banner of environmentalism, green cronyism has helped fatten the bank accounts of investment bankers and tech moguls at great public expense.

    Wall Street grandees, many of whom should have spent the past years studying the inside of jail cells for their misbehavior, are only bothered by how to spend their ill-gotten earnings, and how not to pay taxes on it. The Obama Administration in concert with the Congress , have consented to allow  the oligarchy to continue paying capital gains taxes well below the income tax rate paid by poor schmuck professionals, small business owners and high-skilled technical types. 

    In this, both political parties are to blame. Republican fealty to the interests of the investor class has been long-standing. But Obama and the Democrats are also increasingly backed in their “progressive” causes by the very people — Wall Street traders, venture capitalists and tech executives — who benefit most from the federal bailouts, cheap money, low interest rates, and low capital gains tax rates.   

    Large financial institutions also have benefited greatly from regulations that guaranteed their survival while allowing for increased concentration of financial assets. Indeed in the first five years of the Obama Administration the share of financial assets held by the top six “too big to fail” banks soared 37%, and now account for two-thirds of all bank assets.  

    “Quantitative easing,” the government’s purchase of financial assets from commercial banks, essentially constituted a “too big to fail” windfall to the largest Wall Street firms, notes one former high-level official. By 2011, pay for executives at the largest banking firms    hit new records, just three years after the financial “wizards” left the world economy on the brink of economic catastrophe. Meanwhile, as “too big to fail” banks received huge bailouts, the ranks of  community banks continues dropping to the lowest number since the 1930s, hurting, in particular, small businesspeople that depend on loans from these institutions.

    This tilt towards of the financial elites, as Elizabeth Warren has noted, occurred during both the Bush and Obama Administrations. “The government’s most important job,” she remarks, “was to provide a soft landing for the tender fannies of the banks.”

    Warren’s observation reflects the influence exercised by the oligarchs in both parties, a bipartisan alliance of the super-rich to buy government influence and protect theior wealth. A recent Mercatus Center report found that politically connected banks received larger bailouts from the Federal Reserve during the financial crisis than financial institutions that spent less or nothing on lobbyingand contributions to political campaigns. Another study by two University of Michigan economist found a strong correlation between receiving TARP assistance and a company’s degree of connectedness to members of congressional finance committees.

    As well as they have done lately, Wall Streeters have not been the only oligarchs to thrive under Obama. The tech industry, once an exemplar of dynamic capitalism, has become increasingly dominated by a handful of firms and their venture capital backers. These tech fortunes are greatly enhanced by monopolistic control of key markets, whether in search (Google); computer operating systems (Microsoft); internet retail sales (Amazon); or social media(Facebook). All of the tech giants are incessantly trying to extend their dominion into control of people’s lives, whether by tying them to a device, like the newAmazon phone, or by re-selling people’s data to advertising.

    These tech companies, which author Rebecca MacKinnon (labels) calls “the sovereigns of cyberspace,” all enjoy strong, even intimate, ties to the Obama Administration. They have little reason to fear anti-trust crackdowns or scrutiny of their increasingly gross violations of privacy from friendly government lawyers.

    Of course, if thing ever soured with the Democrats, the oligarchs can always look for benefactors among Republicans legislators, as Facebook and Google are already doing,. After all, most Republicans, particularly in the Senate, embraced the bailout of the large financial institutions — the very essence of the crony capitalism that favors large, well-connected institutions over smaller ones.

    For the most part, the oligarchs have lined up with Obama from the start. Indeed, at his first inaugural, notes one sympathetic chronicler, the biggest problem for donors was to find sufficient parking space for their private jets. As an observer at the left-leaning Huffington Post put it, “the rising tide has lifted fewer boats during the Obama years -and the ones it’s lifted have been mostly yachts.”      

    The War Against Small Business

    If Obama has proven a god-send for the oligarchs, he has been less solicitous of small business. Long a key source of new jobs, small business start-ups have declined as a portion of all business growth from 50 percent in the early 1980s to 35% in 2010. Indeed, a 2014 Brookings report, revealed 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.

    There are many explanations for this decline, including the impact of offshoring, globalization and technology. But much can be traced to the expansion of regulatory power. Small firms, according to a 2010 report by the Small Business Administration, spend one-third more per employee than larger firms on staff  who can help them meet with federal dictats. The biggest hit to small business comes from environmental regulations, which cost 364% per employee more for small firms than large ones. Small business owners and self-employed professionals also have also been among those most impacted, through the cancellations of their health care policies, by the Affordable Care Act.

    The Politics of Oligarchy

    To be sure, every society has its Oligarchs, those who take leadership and lay foundations for the future. Economically, the oligarchs are necessary as creators and investors in new economic potential. The great 19th century robber barons, though often exceedingly ruthless in their practices, left an enormous legacy in the form of industries such as steel, utilities and railroads that underpinned the industrial era. But only later, due to reforms and the further expansion of the economy, did the oligarch’s work translate into mass affluence.

    The need to put limits on oligarchic power was clear to leaders such as Theodore Roosevelt who labeled his era’s moguls as “malefactors of great wealth.” In the early 20th century, many progressives and populists, as well as a growing socialist movement, rose to oppose oligarchy. But for most this was not so much an anti-capitalist, or even anti-market movement as a concern great power and wealth concentrated in the hands of the few. That seem fear of concentrated, anti-democratic power worried the founders, like Jefferson and Madison, who confronted a very different kind of oligarchy during the war for independence. 

    “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few,” Supreme Court justice Louis Brandeis once noted, “but we can’t have both.”

    These sentiments are still valid. Many, if not most Americans, recognize that our political economy is not working for the majority of the country. The vast majority recognize the reality of crony capitalism and understand that government contracts go to the politically connected. More troubling still, less than one third believe the country even operates under a free market system. Most suspect that the American dream is falling increasingly out of reach. By margins of more than two to one, Americans say they enjoy fewer economic opportunities than their parents, and that their offspring will have far less job security and disposable income.     

    Today, Americans increasingly see the same threat Brandeis saw. American politics has ceased to function as a rising democracy and come to resemble an emerging plutocracy. These days, political choice is fought over by dueling groups of billionaires appealing to right and left to see who will best look after their interests. This can be seen in the emergence of conservative oligarchs like the energy billionaire Koch Brothers or the heirs to the Wal-mart fortune, who have emerged as the ultimate bêtes  noires for Democrats like Senate Majority Leader Harry Reid.

    Yet Reid and other Democrats have less problem with their own oligarchs. Among the .01 percent wealthiest Americans who increasingly dominate political giving, the largest contributions besides the conservative Club for Growth went to Democrat aligned groups such as Emily’s list, Act Blue and Moveon.org. Seven of the ten Congressional candidates most dependent on the money of the ultra-rich were Democrats. In 2012, President Obama won eight of the country’s ten wealthiest counties, sometimes by margins of two-to-one or better. He also triumphed easily in virtually all the top counties with the highest concentrations of millionaires and among wealthy hedge fund managers.  

    The Oligarchs pervasive influence buying from both parties undermines the very structure of the democratic system as well as a competitive economy. It allows specific interests -developers, Wall Street, Silicon Valley, renewable or fossil fuels producers – enormous  range to make or break candidates. As the powerful battle, the middle classes increasingly become spectators.  It’s not far off from the decadent phase at the end of Greek democracy or the late Roman Republic, examples that resonated with our classically educated founders.

    Many Americans today are alarmed, and rightfully so, by this concentration of wealth and power. But right now this grassroots reaction mainly finds its expression from the political fringes. The Tea Party, for example, had its origins in opposition to the bank bailouts that followed the financial crisis. This, not surprisingly, has made some large bank executives as wary of this right-wing movement as they were of Occupy Wall Street.

    In contrast, the oligarchs have little to fear from the mainstream of either party, though there are signs that smoke is wafting over the political horizon. The defeat of house majority leader Eric Cantor partly reflected concern over his incessant lobbying and cozying up to Wall Street. Similarly, nascent opposition to Hillary Clinton’s corporatist campaign is coming from at least some Democrats, notably Massachusetts Senator Elizabeth Warren. The recent shift leftwards of the Democratic Party, epitomized by New York’s Bill de Blasio but spreading nationwide testifies to growing unrest among the grassroots.

    These voices, both right and left, are still far from the main corridors of federal power but they are getting closer. The oligarchs should not rest too comfortably. An observer of gilded age America may have also assumed that the oligarchic power of the robber barons and industrial magnates would continue to wax inexorably. Yet, there comes a time — as occurred in the early years of the last century and again in the 1930s — when the political economy so poorly serves the vast majority that it ignites a political prairie fire. We are not there yet, in either party, but if the corrupt bargain between the oligarchs and the political class goes unbroken, the wait may not be long.

    This story originally appeared at The Daily Beast..

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. His next book The New Class Conflict is now available for pre-order. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    Barack Obama photo by Bigstock.

  • European Style Going Out of Fashion at Ballot Box

    The recent political earthquake in Europe has great implications for the United States, both internationally and domestically. The unpopularity of European Union institutions produced record-breaking votes for a motley assortment of anti-establishment parties across the Continent, suggesting it’s time to stop looking across the Atlantic for role models as Europe’s dismal prospects have inspired the lowest levels of political support in several decades.

    Many of the parties that did best in the May 25 multinational balloting for the European Parliament – from Greece’s Far Left Syriza party to Britain’s oddball United Kingdom Independence Party and France’s historically racist National Front – are hardly ideal candidates for responsible governance. Yet, despite their many blemishes, these and other anti-EU parties fed on growing distaste for the 28-nation EU’s sprawling, largely unaccountable bureaucracy blamed for, in the words of one British group, “undermining” liberal democracy in these countries.

    This suggests that it’s time for Americans to stop looking across the Atlantic for role models. For decades, American gentry liberals have seen the EU as a superior mode of governance. Jeremy Rifkin’s 2005 book, “The European Dream” – and a host of similar tracts that all assert European superiority – now may seem absurd on their faces, but it’s doubtful many EU boosters, here and abroad, will let facts get in their way.

    The Urge to Merge

    The bigger loser in the May elections was the notion that more concentration of power leads to better results. Many American intellectuals and policy wonks favor handing ever-greater control to the “best and brightest” who run academia, much of the media and the bureaucracy. Figures, such as former Obama budget adviser Peter Orszag and New York Times columnist Thomas Friedman, argue that power should shift from naturally contentious elected bodies – subject to pressure from the lower orders – to credentialed “experts” operating in Washington, Brussels or the United Nations. This notion suggests the popular will is too lacking in scientific judgment and societal wisdom to be trusted with real authority.

    Yet, as the EU parliamentary elections suggest, people object to having details of their lives controlled from a great distance. Beyond the Right, many on the Left also nowoppose the Brussels-based EU for imposing austerity measures on several struggling economies. The British website Socialist Alternative saw the vote not just as a shift to the right but “a revolt against the capitalist establishment,” which remains, like the bureaucracy and media, devotedly pro-EU.

    In the United States, there is also mounting resistance to centralization. The 2010 congressional elections reflected a reaction to attempts by President Obama and his Democratic Party to put more of our lives under Washington’s control. Even now, less than two years after the president’s re-election, opposition to an extended federal role is, if anything, even stronger. Less than one in five Americans trust the federal government, and barely two in five see it as even capable of reversing the inequality. There may be a groundswell of support for the social democratic goals of the Great Depression’s New Deal, but likely not for the reimposing of its highly centralized policy prescriptions.

    Energy and Economy

    Pundits, such as the New York Times’ Paul Krugman, routinely describe Europe’s approach to economic, environmental and social policy as far more enlightened than that in the U.S. Wherever possible, progressives push European style in areas such as energy, with strong attempts to force a rapid conversion to “green” energy.

    Yet, there’s not much to cheer for in Europe’s energy policy. The attempt to turn the Continent into a renewable-energy superpower has been hampered by soaring prices. The policy has increased dependence on unreliable and expensive renewable power – as well as Russian natural gas – forcing some European countries, including Germany, to boost their use of coal, certainly not much of a victory against climate change.

    Ultimately, the consequences of high energy prices tend to fall, as they do here, on the middle and working classes, who see their electricity bills soar, along with the cost of gasoline. Some Europeans, in fact, may see their jobs threatened as employers look for lower-cost alternatives, including moving to energy-rich parts of the USA.

    Addressing Inequality

    In seeking out economic models that promote greater equality and upward mobility, many pundits look to Europe as a model. French economist Thomas Piketty’s influential book, “Capital in the Twenty-First Century,” argues that the only way to confront increasing income inequality and prevent deeper social fracturing is to expand the “social state” that forcibly redistributes wealth. In his mind, economic growth, traditionally a prime source of social uplift, is little more than a “illusory” solution.

    Like many American progressives, Piketty looks to governmental action as the sole force for greater equality. Financed by taxes on wealth, the “social state” would curb the rich, but would also empower the bureaucracy and other parts of the rising clerisy with unprecedented power.

    Yet recent European experience also provides little support for the benefits of redistribution, given the persistently high rates of unemployment across most of the EU. This is particularly true for much of the Continent’s youth, who are widely described as “the lost generation.”

    Just as in the United States, pervasive inequality and limited social mobility have been well documented in larger European countries, including France, which has among the world’s most evolved welfare states. This is true even in historically egalitarian Sweden, where, over the past 15 years, the gap between the wealthy and other classes has increased four times more rapidly than in the United States. As Europe’s population ages, and its economies stagnate, demands for redistribution may well increase, but the ability to pay will surely decline.

    Issue of Immigration

    Concern over immigration has been a key driver in mounting anti-EU sentiment. Immigration has always been a more contentious issue for Europeans, who generally belong to a single ethnic group and prefer something closer to homogeneity than to the kind of rolling ethnic evolution that characterizes the United States. This nativism has been painfully evidenced in recent decades in from everything from the violent breakup of Yugoslavia and the far more civilized dismantling of Czechoslovakia to France’s recent campaign against the Roma, Catalonia’s attempts to divorce from Spain, and even the upcoming vote on Scottish independence from the United Kingdom.

    During the boom times of the 1950s and ’60s, many European countries – France, Germany, Netherlands and the U.K. – invited hundreds of thousands of foreign workers, many from outside Europe. But with European labor markets far weaker, such an infusion seems to many middle- and working-class voters as a threat to their economic futures as well as to their identities.

    Immigration played a role in UKIP’s victory in Britain’s voting for European Parliament.Diversity in London, by some counts home to the world’s largest concentration of immigrants, thrills London’s media and business communities but stirs resentment, particularly among more working- and middle-class voters. The fact that as many as 87 percent of new jobs generated in the recovery go to immigrants has not warmed their sentiments.

    Future of the ‘nation-state’

    As we look to how to reform our own less-than-perfect union, adopting the European approach seems, at best, misguided. One does not have to share the Tea Party’s reflexively hostile view of government to see that attempts to expand control from Washington could, in the long run, create the very stagnation and often-ugly political reactions that we see in Europe today.

    More to the point, the drift toward an EU-like state works against the very structure of the American political community, designed to disperse power among various levels of government and varied constituencies. The tendency of administrations to rule through executive orders, or regulatory agencies, has been growing, particularly during the Obama years; a centralized state also could pose a threat to progressive Americans and their values under conservative rule.

    For America, this may be the biggest takeaway from Europe’s crisis. Our political culture, for all its problems, was designed to allow localities greater leeway in determining their own fates. There are many areas – water, air quality, arterial road infrastructure – that require cooperation along regional lines, but, for the most part, the best approach, whenever possible, is to allow localities to control their fates. It is a decentralized, bottom-up system that, for the most part, has performed far better over time than the dysfunctional blunderbuss that is the European Union.

    This article first appeared in the Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

  • California’s Choice – Growth or Decline

    I’ve been friends with Charlie Sena for almost two decades. Charlie, a longtime entrepreneur, Democratic political operative and fundraiser for former Gov. Gray Davis, recently chided me about what he sees as my “negativity” about California and its future. My response was that, given its natural advantages, this region should not be in such a weakened condition. Decline, I suggest, is not an imperative here, but largely a choice.

    Last week, I decided to confront this issue over lunch at Citrus Grille in Orange, just down the block from Chapman University, where I teach. Charlie noted that the negative points I was making were correct, but I owed it to the readers to “write a piece on why California can be, and should be, a state with the right climate for business growth.”

    So, we sat in the restaurant, working on a list of positive things for California to build on. We centered on working with our population, including many immigrants and entrepreneurs, reinforcing our connections to Asia and Mexico and, finally, taking advantage of our climate. “The great strength of California,” Charlie suggests, “is people – people who go out and make it on their own.”

    Immigrant Edge

    The first group Charlie pointed to are immigrants, a group for which California long has been a lure. Twenty percent of Californians are foreign-born, and one of four immigrants nationally lives in our state. Amidst a general downturn in overall entrepreneurial activities, notes a recent study, the foreign-born have continued to expand their business footprint. In 2011, notes the Kaufmann Foundation, immigrant start-up rates were twice those of the native-born.

    Attitudes are important here. To succeed in a highly regulated, expensive state like California, you need to have more than usual perseverance.

    Asians, for example, according to the Pew Research Center, are far more likely than other Americans to believe that “hard work” pays off. Not surprisingly, they also tend to have higher levels of education, income and business success than other Americans.

    But equally important has been the entrepreneurial growth among Latinos, who became the state’s largest ethnic group in 2014, according to demographers, and could be close to 50 percent of the population by 2050. Indeed, a recent study of Latino business found that Hispanic entrepreneurs have more than tripled since 1990, from 577,000 to more than 2 million. Not only did this growth outpace that of the overall population increase among Hispanics, but at a rate of increase far above the national average.

    Anyone who drives out into the vast expanses of the state can see these businesses – new markets, countless restaurants, small factories, farms, local banks and scores of smaller service firms. California’s new commercial signature is not the traditional mall or luxury shopping street, but, rather, multiethnic commercial areas, like the Diamond Jamboree center in Irvine.

    Rise of Self-employed

    But there’s also signs of greater growth in the ranks of self-employed people across the population. The self-employed proprietor is the one entrepreneurial category that has grown since the recession. This may well represent a pragmatic choice by business people who wish to make money, but avoid the ever-increasing regulations here that make having employees increasingly difficult.

    This growth is particularly vibrant in the Riverside-San Bernardino area, notes a recent study by the economic modeling firm EMSI Inc. The inland region expanded its sole-proprietor ranks by 11.8 percent since 2008, second to booming Houston and more than twice the growth rate of either the Bay Area or Los Angeles-Long Beach. All these key California areas greatly outperformed such competitors as Denver, Greater Washington, D.C., Chicago or Atlanta.

    Foreign connections

    California also has enjoyed a unique connection to the fast-growing economies of the Pacific Rim and Mexico. Texas succeeded in luring Toyota, as Tennessee did with Nissan, but neither state possesses the intense cultural and historic ties California enjoys with Japan and other Pacific Rim countries. To be sure, places like Plano, outside Dallas, and around Houston’s Bellaire Road look increasingly like the San Gabriel Valley or Garden Grove in their ethnic flavor, but they are at least a generation – and an order magnitude – behind.

    Where Texas eats our lunch, says Charlie, who lived in Houston years ago, is in forging ties with Mexico. Many Californians – particularly on the right but also on the “green” left – tend to regard Mexico as something of a threat to our social and ecological order. But supposedly less-enlightened Texas, where business is king, has developed a powerful passion for closer ties to Mexico, with a growing partnership between the Lone Star State and Mexico, which, for example, is already Houston’s foremost trading partner.

    Political dilemma

    So, why is California not taking advantage of these assets? One main reason lies with the regulatory and tax agendas of Charlie’s own party, something he is quick to acknowledge. “The Democratic Party,” he suggests, “is on a collision course with reality. They don’t realize that you need a broadly growing economy to support or expand social services.”

    This is the dilemma that progressives need to confront in California. An over-regulated, overtaxed economy slows business growth and forces companies to look elsewhere to expand, particularly outside of very high-end functions. Superhigh income tax rates deprive small-business owners of the capital they need to reinvest and grow their enterprises. Under the current regime, many of them, particularly the young, may find starting a business in Colorado, Nevada, Utah or Texas easier and more financially rewarding.

    Back to Pat?

    Like Charlie, I admire many of the things we created during the great expansion of the Gov. Pat Brown era, a half-century ago – the higher education system, the freeways, the water projects, to name three. All these were paid for by broad-based economic growth, and contributed to accelerating that growth over time. Our success made California a model for other states – including Texas and North Carolina – which wanted to leave behind their feudal, and deeply racist, pasts.

    Now, these people are essentially beating us at our own game, and unless we respond, they will continue to attract not only large businesses, such as Toyota and Occidental, but also talented people critical to the grass-roots economy.

    Politicians in Sacramento, and many city halls across this state, seem to have little notion of, or even interest in, economic growth beyond serving the interests of public employees and crony capitalists, whether in subsidized “green energy” boondoggles or among rent-seeking developers. These kind of policies are simply transfers of resources from neighborhoods, suburban or urban, to the well-placed; they have not been significant economic drivers.

    Charlie’s last point – climate – remains critical. This region is never going to become Detroit, no matter how misguided is our political class, simply because of its weather and topography. People and businesses will want to come here if they can make a decent living and enjoy the option of housing, largely single-family homes, that remains the ultimate goal of most upwardly mobile people, particularly immigrants.

    So, if maybe sometimes I get too negative about California, it’s in large part because we squander opportunities and seem determined to ignore all the basic economic data. In this shortcoming, the media, notably the Los Angeles Times, has been particularly gratuitous, acting as if the loss of key companies, such as Occidental and Toyota, was largely irrelevant and, indeed, inevitable.

    This is not, in my mind, the California I moved to four decades ago. That we do things differently here is not a negative – it’s why many of us are here – but we need to recognize that you cannot support an ever-expanding welfare state or do much of anything about climate change simply by chasing people and individuals elsewhere. We need to start developing policies that exploit our advantages and not rest on our glorious past. We need to see, as Charlie would say, that decline is not inevitable, but only a choice that too many in the state seem determined to embrace.

    This article first appeared in the Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    Photo illustration by krazydad/jbum.

  • Inland California Needs to Get in the Zone

    California’s dream is shrinking inexorably, and only radical steps can prevent the condition from becoming permanent. Compared with previous economic expansions, fewer state residents and communities are benefiting from this recovery, which has largely been restricted to the small coastal zone surrounding the Bay Area, as well as certain parts of western Los Angeles, Orange and San Diego counties.

    As the economy has strengthened, what is called a “boom” in the mainstream media is really a story of one region. Some 300,000 jobs have been created as the recovery has strengthened over the past 15 months,but three-quarters of them have been concentrated along the coast, mostly in the San Francisco-San Jose corridor.

    In contrast, much of the interior of the state, from the Inland Empire, where the poverty rate has doubled since 1990, to the Central Valley, is doing far less well. Unemployment has dropped to near 5 percent in the Bay Area, but remains above 8 percent in the Inland Empire, and above 10 percent in many interior communities, from Fresno and Modesto to Bakersfield. Viewed in the national media as some sort of permanent basket case, the inland region, booming a decade ago, was recently compared by a UCLA economist to Appalachia.

    Get in the ‘zone

    California’s interior clearly needs a form of new deal that will allow it to participate in the state’s recovery. This plan starts with declaring the entire area an “enterprise zone” that allows communities to opt out from some of the harshest, coastally driven regulations.

    Enterprise zones typically refer to economically ailing portions of cities where policies to encourage economic growth and development are implemented for businesses in the designated area. Such policies, on a regional scale, are needed in inland California.

    Extraordinary controls on development, expensive “green energy” policies and high taxes on small enterprises may seem reasonable, or at least bearable, in a coastal economy fueled by soaring capital gains, with the prospect that the gentry rich can supply trickle-down service jobs to the hoi polloi.

    But such policies are often disastrous for the state’s interior, which lacks the resources or appeal of the coastal havens. Take the issue of electricity prices, which have soared, in large part, because of the green-energy policies favored by influential residents along the coast. Energy costs for many California businesses are roughly twice those for consumers in the Pacific Northwest, Salt Lake City or Denver. Yet here’s the rub: The climate along the coastal strip requires less air conditioning or heating, unlike that of the interior regions, where temperatures rise and fall more severely.

    Worse yet, there’s more pain to come: California’s recently enacted carbon “cap and trade” system could boost gasoline prices, already 55 cents per gallon above the national average, another dollar.

    Unaffordable Coast

    Many wealthier coastal residents can afford housing close to major job centers and, for that matter, more expensive gasoline. But the same pump prices are a dagger aimed at the finances of many middle- and working-class people who live in the interior and have to commute to employment. The gentry retort – that such people should move to the city – ignores the fact that most middle- and working-class people can’t afford to live decently in places like Los Angeles, much less San Francisco, given current prices.

    People in recent decades have moved to the interior largely to improve conditions for their families, not to lower their quality of life. Rising gas prices won’t lead them “back to the city” but, more likely, will force many to cut back further, or consider moving elsewhere. There’s no discernible movement of people to the coastal counties from the interior; if anything, the pattern, although less marked than a decade ago, remains quite the opposite.

    Despite a growing population, the long-term sustainability of the interior’s economy now is questionable. High energy costs, onerous regulatory burdens and land-use constraints imposed by Sacramento are systematically undermining industries that have traditionally driven growth in the state’s interior. These include construction, manufacturing, ranching and farming, along with logistics and business services, all of them employers of middle- and working-class Californians.

    Creating an expansive enterprise zone would allow these businesses to compete more successfully with other states. It might encourage, for example, manufacturers leaving or expanding away from the coast to head to inland California instead of to another state, or propel builders to construct affordable housing, including single-family homes, in places like the Inland Empire, as opposed to in Texas or Arizona.

    Why should the Bay Area oligarchy agree to such a step? One reason may be to avoid the soaring cost of supporting so many poor and needy people in the interior. When the tech bubble bursts, the state will face another cash crunch. Having a vast impoverished population then will mean even higher taxes and worse services, something that will affect all but the most high-end businesses.

    Dreams, green or otherwise, take money, but our bifurcated economy relies increasingly on the fortunes of the few. California’s top 1 percent of earners paid 50 percent of state income taxes in 2012, up from 40 percent the year earlier. This is not surprising since so much of the state is either impoverished or stagnating. Once aspirational regions, proud contributors to the Golden State’s economic diversity, increasingly resemble dependent countries in the Third World.

    Modern-day progressives respond to these realities by pushing for such things as raising the minimum wage, or imposing even more Draconian labor regulations. This may help some low-income workers, but it’s hard to see how it would boost the interior’s competitiveness. In contrast, the creation of an enterprise zone would give these areas at least a fighting chance.

    Ultimately, what kind of California do we want for our children? Right now, the state is evolving into something of a neofeudalist society, consisting of an affluent few, concentrated in the coastal belt, a large and expanding poverty class and a struggling, shrinking middle class. There’s the California of the oligarchs with 111 billionaires, by far the most of any state, with personally held assets worth $485 billion. Together, they own more than the GDP of all but 24 countries in the world. At the other end of the scale is a state with the nation’s highest poverty rate (adjusted for housing costs) – above 23 percent – and roughly one-third of the nation’s welfare recipients.

    This condition has been aptly labeled by one Central Valley writer as “liberal apartheid.”The well-heeled, largely white and Asian coastal denizens live in an economically inaccessible bubble – due to extremely high housing prices – while the largely poor, working class, heavily Latino communities eke out a meager existence in the state’s eastern interior.

    To be sure, many forces beyond Sacramento’s control – globalization, immigration, the asset-oriented nature of the recovery – have contributed to this growing wealth gap. But gentry-led pubic policies have exacerbated the refeudalization. Young Californians, notes one study, already are now less likely to graduate from college than were their parents.

    A Shrinking middle

    Meanwhile, the middle class, the social and economic linchpin of the state, continues to decline, with a far more dramatic drop in state households earning $35,000 to $75,000, according to research from the California Lutheran University forecast project, than the national average. As late as the 1980s, the Golden State was about as egalitarian as the rest of the country, and roughly 60 percent of its population was middle class. But now, for the first time in decades, the middle class is a minority in California.

    In fact, many Californians face a future as modern-day land serfs, renting and paying someone else’s mortgage. If they choose to start a family, they increasingly look to settle elsewhere, ironically, some to locations like Oklahoma and Texas, places that historically sent eager migrants to the Golden State, whose appeal combined economic opportunity, its milder climate and spectacular scenery.

    The prospect facing California is not unlike that seen in other Democratic-dominated regions, such as New York, where a well-organized and savvy, affluent, urban minority can impose ever-greater restrictions on the relatively unorganized, inarticulate exurban populations. Like New York’s Appalachia-like upstate regions, interior California faces a dismal future that, over time, will lead to increasing demands on the middle and upper classes. Only by allowing the interior a decent chance can California truthfully claim that its economy has, indeed, turned around.

    This article first appeared in the Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    Photo by Altus via Flickr

  • Watch What You Say, The New Liberal Power Elite Won’t Tolerate Dissent

    In ways not seen since at least the McCarthy era, Americans are finding themselves increasingly constrained by a rising class—what I call the progressive Clerisy—that accepts no dissent from its basic tenets. Like the First Estate in pre-revolutionary France, the Clerisy increasingly exercises its power to constrain dissenting views, whether on politics, social attitudes or science.

    An alliance of upper level bureaucrats and cultural elites, the Clerisy, for for all their concerns about inequality, have thrived, unlike most Americans, in recent years. They also enjoy strong relations with the power structure in Washington, Silicon Valley, Hollywood and Wall Street.

    As the modern clerisy has seen its own power grow, even while the middle class shrinks, it has used its influence to enforce a prescribed set of acceptable ideas. On everything from gender and sexual preference to climate change, those who dissent from the official pieties risk punishment.

    This power has been seen recently in a host of cancellations of commencement speakers. Just in the past few months Ayaan Hirsi Ali, former Secretary of State Condoleezza Rice, International Monetary Fund managing director Christine Lagarde, and former UC Berkeley Chancellor Robert Birgeneau, have been prevented from speaking by campus virtue squads whose sensibilities they had offended.

    The spate of recent cancellation reflect an increasingly overbearing academic culture that promotes speech codes on what is permissible to say and even seeks to provide “trigger warnings” to warn students about the presence of nominally troubling subject matter in readings and discussions so they can avoid the elements of reality they find offensive. 

    The very term Clerisy first appeared in 1830 in the work of Samuel Coleridge to described the bearers society’s highest ideals: the intellectuals, pastors, scientists charged with transmitting their privileged knowledge them to the less enlightened orders.  

    The rise of today’s Clerisy stems from the growing power and influence of its three main constituent parts: the creative elite of media and entertainment, the academic community, and the high-level government bureaucracy.

    The Clerisy operates on very different principles than its rival power brokers, the oligarchs of finance, technology or energy. The power of the knowledge elite does not stem primarily from money, but in persuading, instructing and regulating the rest of society. Like the British Clerisy or the old church-centered French First Estate, the contemporary Clerisy increasingly promotes a single increasingly parochial ideology and, when necessary, has the power to marginalize, or excommunicate, miscreants from the public sphere.

    Of course, every society needs a clerical class, to instruct the young and maintain cultural standards. But in the past, at least in modern America, they tended to be a tolerance for fairly disparate views. Today’s Clerisy, by contrast, is increasingly homogeneous in its beliefs- despite pockets of conservative power such as the Heritage Foundation and most notably the media empire controlled by the Murdoch family.

    The modern Clerisy’s homogeneity springs from their social conditioning. Educated along similar ideological lines at major universities, they tend to be geographically concentrated in wealthy, “progressive” places, where few dissent from the prevailing worldview. As such they breathe, as analyst Walter Russell Mead suggests, “within a cocoon.” Inside their urban cocoons they operate from a thoroughly internalized set of progressive tropes on such issues as the environment, urbanism, gender and race. In practical terms, such as in their support of President Obama and the Democratic Party, they are both broadly allied with centers of power and influence, much as the clergy was in Medieval and early modern times.

    America’s Nomenklatura

    The Clerisy has thrived during these hard times. Since 1990, the number of government workers has expanded by some five million to some twenty million. That’s four times the number who were employed by the government at the end of the Second World War, a growth rate roughly twice that of the population as a whole.

    The upper bureaucracy have been among the greatest beneficiaries—along with Wall Street and the green crony capitalists —of the Obama Administration’s economic policy. The number of workers, particularly at the federal level, continued to rise even at the height of the great recession. Between late 2007 and mid-2009, the number of U.S. federal workers earning at least $150,000 more than doubled. The ranks of federal nomenklatura—combined with a host of related private contractors —- have swelled so much that Washington DC by 2012 replaced New York as the wealthiest region in the country .

    The upper bureaucracy has evolved into a privileged and cossetted caste. In California, state workers are allowed such special privileges as having their Department of Motor Vehicle records kept confidential; a sensible precaution for those, like police, who deal with criminals but now expanded to cover a vast array of public servants, including social workers. Naturally, as beneficiaries of an expanded government, public sector unions have been among the strongest backers of regulatory growth and ever increased social services. Their political power has also been on the rise; since 1989, public sector unions accounted for two of the top three top ten donors to political candidates.  

    More important still is the bureaucracy’s ability to control society through unelected agencies, something that grew even during Republican administrations, but has achieved unprecedented scale under President Obama. Increasingly, agencies such as the EPA and HUD, seek to shape community development patterns—for example on land use policies —- that traditionally fell under local control. With their power, the agencies have harassed unfriendly conservative organizations, as seen by the IRS, and monitored the populace’s private conversations, seen in the case of the NSA. But to some prominent members of the Clerisy, these power grabs haven’t gone far enough.

    Leading figures of the Clerisy, like former Obama budget advisor Peter Orszag and Thomas Friedman, argue that power should shift from naturally contentious elected bodies—subject to pressure from the lower orders—to credentialed “experts” operating in Washington, Brussels or the United Nations. The popular will, according to the Clerisy and its allies, lacks the scientific judgment and societal wisdom to be trusted with power.

    The Real College of Cardinals.

    Like the upper bureaucracy, academia has also expanded rapidly in recent decades. In 1958 universities and colleges employed under 370,000 people; by 2014 that number had expanded to roughly 1.7 million. With universities now serving roughly twenty million full and part time students, academics have never exercise more influence over young Americans.

    Ironically, despite its patina of egalitarian beliefs, the academic world now epitomizes the new hierarchical class order as much as any major institution. The roughly 1.4 million instructors in the University system, have experienced what one writer calls “the great stratification” between roughly 500,000 largely older tenured “alpha” Professors and a vast “beta” of low-paid teaching assistants, contingent faculty and those working in extension programs.

    At the same time, the bureaucracy of the University, like that of the government, has exploded, even more at elite (and tax-favored) private schools than among public ones. Whereas there were about 250,000 administrators and professional staff members in 1975, about half the number of professors, by 2005 there were over 750,000, easily outnumbering tenure-tracked professors. As the University has gained in power, those in control have taken on ever more the trappings of an aristocracy whose primary mission is self-preservation—not unlike the Medieval European clergy.

    The Creative Elite

    The final element of the Clerisy’s triumvirate is the culture-based industries and their upper middle classes participants. Arnold Toynbee identified the “creative genius” as the historic leader and savior of society—an apt description of the self image held by many of the new tech and media elites.

    Today, this “creative” element has grown ever more pervasive. Artists, writers, fashion designers and actors have achieved enormous status in our society; and a handful has become very wealthy. More important still has been the rise of media oligarchs, some tied to the tech establishment, who now rank among the wealthiest Americans. Indeed of the world’s 25 richest people, a majority come from either the information sector, the fashion industry or media. These new media elites, combined with the tech oligarchy, could well emerge as the dominant economic force of the 21st Century, surpassing fortunes made in energy, manufacturing, or housing.

    The media itself is increasingly populated by the children of prominent politicians and by those who come from the ranks of the plutocracy. These include the offspring of the Reagans, GOP stand-bearer John McCain, various Kennedys, and Nancy Pelosi. In Hollywood, meanwhile, some of the new powerful producers come from the ranks of the ultra-rich, including heirs to the Pritzker fortune and the daughter of Oracle Founder Larry Ellison, one of the world’s ten richest men.

    The Clerical Consensus

    Today’s Clerisy attempts to distill today’s distinctly secular “truths”—on issues ranging from the nature of justice, race and gender to the environment—and decide what is acceptable and that which is not. Those who dissent from the accepted point of view can expect their work to be simply ignored, or in some cases vilified. In the Clerical bastion of San Francisco, an actress with heretical views, in this case supporting a Tea Party candidate, who was pilloried, and lost work for her offense.

    The pattern of intolerance has been particularly notable in the area of climate change, where serious debate would seem prudent not only on the root causes and effects, but also what may present the best solutions. Climate scientists who diverge from the warming party line, even in a matter of degree, are routinely excoriated by the Clerisy as “deniers” of “settled” science even in the face of 15 years of relatively stable temperatures. The media also participates in this defense of orthodoxy. The Los Angeles Timesas well as the website Reddit have chosen to exclude contributions from skeptics.

    The stifling orthodoxy from the technocrats and media elite is benign compared to the inquisitional behavior can be seen in institutions of higher education. It is nothing short of tragic, notes civil libertarian Nat Hentoff, that a 2010 survey of 24,000 college students found that barely a third thought it “safe to hold unpopular views on campus.”

    Such attitudes seem natural in an environment where, according to various studies, liberals outnumber conservatives by between eight and fourteen to one. Whether this reflects natural preferences among the well-educated or is partially due to institutional discrimination remains arguable. But consider that 96 percent of all Presidential donations from the nation’s Ivy League schools went to Barack Obama, something more reminiscent of Soviet Russia than a properly functioning pluralistic academy. Nor is there any sign that this trend is slowing. Between 2007 and 2010, a University of California study revealed that “far left” and liberal views grew from 55 percent to almost 63 percent of full-time faculty while the conservative segment dropped from roughly 16 % to less than 12%. If the academic left simply waits long enough, it could look forward to a conservative-free faculty on many campuses.

    A similar, if less uniform, clerical consensus suffuses the media culture, led by the television networks and the leading newspapers. In fact nearly half of all Americans consider the media too liberal, more than three times as many who see it as too conservative. Overall, reports Pew, the percentage who feel news is tilted to one side has grown dramatically from 53 percent in 1985 to 77 percent in 2011.

    To be sure, there remain important exceptions to this rule, notably Fox News and talk radio, and the editorial pages of the Wall Street Journal. Yet the right’s hold on the major media is demonstrably weak, and likely to decline further once Murdoch himself is no longer on the scene. A detailed ++UCLA study found that of the twenty leading news outlets in the country, eighteen were left of center.

    Despite the journalistic embrace of the idea of diversity, a recent Indiana University Study notes that journalists themselves have become increasingly homogeneous.  Journalists are far more likely to be college educated than they were in 1970, and less likely to be a racial minority than just a decade ago. But the biggest change has been an ideological one; barely seven percent in 2013 were Republican, compared to nearly a quarter in 1971.

    Even Arnold Brisbane, the former ombundsman of the The New York Times, has noted the group-think that now overshadows objectivity, long cherished by that most important of America media outlets. Brisbane observed that, “so many share a kind of political and cultural progressivism—for lack of a better term—that this worldview virtually bleeds through the fabric of The Times.”

    These positions are all reflected in almost lock-step media support for President Obama. Over sixteen prominent journalists joined the Obama administration, which was something of a record; in 2012 employees at the major networks sent President Obama almost eight times as much in contributions as they did his Republican opponent.

    This consensus of views prevails as well in the electronic media. As the liberal author Jonathan Chait suggests, the media increasingly reflects not just commercial values, but “a vast left-wing conspirary.” He adds: “You don’t have to be an especially devoted consumer of film or television (I’m not) to detect a pervasive, if not total, liberalism.”

    Will the Clerisy rule after Obama?

    The fact that Republicans continue to maintain considerable power in both Washington and the states suggests that the Clerisy’s power is not yet determinative. And indeed after President Obama leaves office, the Clerisy’s reach may be temporarily diminished, but its ability to set the social and political agenda will likely persist and even grow given their influence to shape perceptions, particularly among the young.

    The current atmosphere of ideological unanimity—in academia, the arts and much of the government bureaucracy—set the stage for the outrages of this commencement season, making painfully palpable the growing authoritarian spirit in so many of our leading institutions. They often see themselves as a liberating force in our society, but in their dislike of conflicting ideas and open debate, today’s  Clerisy increasingly resembles the closed-minded dogmatists of the Medieval church.

    This article first appeared at The Daily Beast.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.