Author: Joel Kotkin

  • Cashing in on So Cal Culture

    Southern California has always been an invented place. Without a major river, a natural port or even remotely adequate water, the region has always thrived on reinventing itself – from cow town to agricultural hub to oil city, Tinsel Town and the “Arsenal of Democracy.”

    Today, the need for the region to reinvent itself yet again has never been greater. Due in large part to regulatory pressures, as well as competitive forces both global and national, many industries that have driven the Southland economy – notably, aerospace, garments and oil – are under assault. A high cost of living, particularly for housing, stymies potential in-migration and motivates industries to look elsewhere to locate or expand.

    As a result, virtually every key Southern California industry has been either stagnating or losing ground to competitors. More important, the area in the past decade has lost much of its appeal as a destination for both immigrants and young people, drying up a huge source of potential innovation.

    To put it in vaudeville terms, Southern California needs a new shtick. We must look to leverage our natural advantages (beyond just our climate) into a new economic paradigm that can withstand competition from the rest of the world and the rest of the country. This opportunity is best seen as the commercialization of culture. These include, as one recent Los Angeles County Economic Development Corp. report stated, “businesses and individuals involved in producing cultural, artistic and design goods and services.”

    This is not largely a matter of museums or concert venues. When it comes to the “fine” arts, Southern California is an increasingly respectable player, but cannot compete on equal footing with London, Paris, New York or Chicago, locales with far older endowments and, arguably, more people with refined artistic tastes. There is also growing competition from cash-rich wannabe cities, from Houston and Dallas to Shanghai, Beijing or Singapore. Fine art has always been for sale to the highest bidder.

    Where Southern California retains a decisive edge is in the popular arts – from casual fashion and industrial design to movies, television and commercials – which could provide the basis for a broad-based economic revival. This requires political and business leadership to shift from their obsession with downtown Los Angeles and dense building projects to a focus on nurturing long-term, sustainable employment.

    This demands that we do everything to maintain the quality of life, largely a matter of our region’s spread-out neighborhoods, that has always been our primary calling card to creative talent. Los Angeles, in particular, boasts by far the largest concentration of artists in the country. Overall, the “creative industries” account, according to a recent Otis Institute study, for roughly 337,000 direct jobs in the Los Angeles-Orange County region. Adding indirect employment, the study estimated these industries employed more than 642,000 people, more than the total employment of the Sacramento area.

    Each of these economic drivers deserves a closer look:

    Fashion

    Over the past quarter century, Los Angeles, with roughly three times as many establishments, has replaced New York as the nation’s garment capital. Most of these companies are small, but, together, the fashion industry across the five-county Southland region employs more than 100,000 people.

    In recent years, apparel manufacturing has been in decline, losing some 40,000 jobs. But there has been growth in such areas as clothing design and merchandising. The region has become the de facto capital for “fast forward” fashion, paced by firms such as Forever 21 Inc., Wet Seal and Papaya. Orange County, capital of the surfwear industry, is home to firms such as Oakley, Volcom, Hurley, Gotcha International, O’Neill, Raj Manufacturing, Mossimo and Stussy.

    These firms, and the businesses serving them, are expected to experience more growth in the coming years, according to the U.S. Bureau of Labor Statistics. Aided by the “onshoring” trend – returning jobs from overseas – and a demand for quicker product turnaround, the Southern California apparel industry seems poised to solidify its hold over the country’s fashions over the coming years.

    Entertainment

    This fashion industry derives much of its success from a link with Hollywood and the rest of the entertainment world. Accounting for more than 40 percent of all creative industry jobs, the entertainment complex is increasingly critical to the region’s resurgence. Much concern has been raised about the future of this key industry, whose growth has slowed, due in part to massive tax incentives from other states and countries.

    Despite this, the industry has been on something of an upswing recently, adding more than 4,600 jobs last year, a gain of 3.7 percent. At 129,700 jobs, employment in the industry is now at its highest level in four years but still tantalizingly below its levels in 2004 (132,200 jobs) and 1999 (146,300 jobs). Growth derives not so much from studio employment but from the ranks of independent contractors, now more than 85,000, well above the prerecession level. Nearly 80 percent of all new entertainment jobs are from the ranks of independent proprietors.

    Digital Arts

    The stabilization, and hopefully resurgence, of the entertainment sector could boost other industries, like digital media, hoping to play off the region’s extraordinary concentration of artists, specialists and story-tellers. Historically, Southern California, in large part due to a relative shortage of venture capital, has been playing catch-up with the Bay Area, and to a lesser extent, Seattle.

    The key to the future is combining other assets besides Hollywood, such as having the largest number of engineers – 70,000 – of any area in the country. Much hope has been placed on the rise of the much-ballyhooed “Silicon Beach” that follows the coastline, largely in Los Angeles, which some people claim is becoming a real competitor to Silicon Valley.

    Yet this is not the first time we have heard this story. Similar growth took place in past digital media waves, only to see reductions as the inevitable cratering takes place during market shake-outs. But employing the strong ties to the Hollywood creative community, there is the real prospect for the region to achieve a critical mass that will allow digital entrepreneurs to remain comfortably here rather than head up to Silicon Valley.

    Industrial Design

    Even as manufacturing employment has declined over time, improving recently to a level of mere stagnation recently, Southern California has maintain a leading position in industrial design. This field is expected to grow, both nationally and in the Southland.

    The area has maintained its leadership as center of automotive design, with studios such as the BMW Design Works, in Ventura, and Mercedes Advanced Design, in Carlsbad, as well as GM’s Advance Design Studio in North Hollywood. The fact that many international firms – for example, Hyundai (Fountain Valley), Kia (Irvine), Honda and Toyota – maintain their North American headquarters in the Southland provides a critical link to the expanding global auto market.

    Primacy in industrial design also extends into other product lines, such as furniture and household furnishings. If this design edge can be combined with automation and the onshoring of jobs, Southern California could enjoy a broad-based resurgence more sustainable than those of more-narrowly based economies, such as in New York or the Bay Area.

    Design of Life

    As we have seen over the past decade, local industries such as entertainment – not to mention fields like fashion, digital and industrial design – are going to be subject to enormous pressure from both home and abroad. China, for example, is building a massive $8.2 billion film studio in a concerted drive to replace Hollywood as the center of the world entertainment industry.

    If we lose our stranglehold on entertainment and other creative industries, there is very little hope for a regional resurgence. We lack the deep digital bench and funding sources of the Bay Area, or New York’s financial industry and its ability to dominate the news media. We can never be as cheap, or business friendly, as our emerging cultural rivals in the South, such as New Orleans, Nashville, Tenn., Austin, Texas, or Dallas, nor can we offer the kind of bargain-basement deals that desperate places, such as Detroit or Las Vegas, might offer to creative types.

    This means we have to focus on preserving and improving those very things – our cultural legacy and a predominately low-rise and flexible-work lifestyle – that differentiates us from far more congested, structured and often far-less pleasant locales like New York – and, even more so, China. In the past, this region has won the “design wars” by being itself, not by trying to create a faux vision that seeks to mimic Manhattan or Shanghai. Ultimately, Southern California can win only by playing the same aces that for generations have led the creative and the questioning to settle in our sun-drenched metropolis.

    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.

    This piece originally appeared at The Orange County Register.

  • Twitter And The Real Economy Of Jobs

    With Twitter’s high-profile IPO, the media and much of the pundit class are revisiting one of their favorite themes: the superiority of the brash, young urban tech elite, who don’t need to produce much in the way of profits to be showered with investor cash.  Libertarians will celebrate the triumph of fast-paced greed and dismiss concerns over equity; progressives may dislike the easy money but will be comforted when much of it ends up supporting their candidates and causes.

    Lost amid this discussion is any sense of reality about the economy for the rest of us. To be sure, in large part due to the Fed, the Bay Area and Manhattan are awash in money. But these places are barely typical of their regions, much less the nation, and are not attuned to creating a prosperity that will benefit more than a slight percentage of our population.

    The focus on digital uber alles is endorsed by a new school of American economics that essentially cedes the future to information-based industries and considers tangible activities like fossil fuel production, manufacturing and construction passé. In the mind of its devotees, such as UC Berkeley’s Enrico Moretti, author of The New Georgaphy of Jobs, information industries, clustered in ultra-expensive, overwhelmingly white (and Asian) enclaves, are the lodestones of our economic future.

    But what about those lacking degrees from elite colleges? The economist Tyler Cowen suggests that the 85% of the population without the proper cognitive pedigree will need to adopt the survival strategies of the poor in Latin America, including a diet heavy in beans.

    Another suggestion is that they can cut hair, walk dogs, and work on the houses of the digerati; given the extraordinary housing prices in the places where the anointed live, how they will afford to live anywhere near them is a bit of mystery. Yet most now putative middle-class Americans are not likely to walk easily to go into that dark night of limited opportunity. There remain economies anchored to more mundane industries, such as energy, construction, manufacturing and logistics, that still offer paths of upward mobility to people who didn’t go to Harvard, MIT or Stanford. These industries also employ more engineers and scientists than the IT sector, and in the case of energy produce more economic benefit to local economies, according to a 2007 study by the Bureau of Economic Analysis.

    In contrast celebrated social media firms, overwhelmingly concentrated close to the venture capital spigot, are both geographically constrained and and employ shockingly  few workers. The darlings of the bubblicious tech boom — Twitter, Facebook, Zynga, LindedIn and Google — employ roughly 58,000 people combined; in contrast the old-line tech firm Intel employ 85,000 people, half in the U.S., while ExxonMobil provides livelihoods to 80,000.

    In term of profits, the supposed holy grail of business, it’s not even close. In Exxon’s disappointing last quarter it racked up $6.9 billion. By contrast Google earned $3.1 billion, while Facebook made $333 million and LinkedIn $3.7 million. Yet what the new tech oligarchs lack on the balance sheet, they seem to make up for with a combination of presumed potential and PR panache.

    The money that has flowed to tech companies in San Francisco has and the much more important Silicon V alley has transformed these geographies,  peninsula  into something resembling glorified gated communities, populated by those lucky enough to have bought earlier and, increasingly, by techno-coolies shipped in from abroad.

    With the cost of housing soaring, the Bay Area has lost domestic migrants until very recently. Meanwhile,  the strongest household growth is taking place in less glitzy metro areas like Houston and other Texas cities, Atlanta, Raleigh and Jacksonville. With the worst of the recession over, most new jobs, once again, according to Moody Analytics, are likely to be  created largely in Sun Belt locations such as Texas, Arizona, Georgia and even Nevada as well as the Great Plains and Intermountain West.

    The people who settle in these places are not, as often asserted dummies stuck at the low rung of the meritocracy; the cities with the fastest-growing college-educated populations are primarily in the Sun Belt and Intermountain West, such as Houston, Austin, San Antonio and Nashville.

    Although many of the new economists believe these areas are generating mainly “crummy” jobs, employment is expanding in higher-wage areas such as energy and manufacturing as well as services and even high-tech. What these unfashionable regions offer are good business conditions, reasonable housing prices and usually lower taxes. Increasingly these seem like the remaining future bastions of middle-class jobs and lifestyles while the coasts mint the most billionaires, many in tech and finance.

    Ideally America’s economy should benefit from both Twitter and wildcatters. But increasingly Silicon Valley, led by Google, has chosen to wage an economic war on competing sectors, notably the fossil fuel industry,  including producers of relatively clean, abundant and cheap natural gas. By doing this they also threaten America’s nascent industrial renaissance, and particularly the country’s heartland. These jobs may not replace all those lost in past decades, but they tend to be higher paying and offer communities, particularly in the Midwest and Southeast, opportunities that few previously thought possible.

    Tech boosters like Moretti tend to claim that jobs created by social media and software firms are more solid, and permanent, than those in more traditional sectors. This is absurd. Tech employment has become, if anything, more unstable than energy. Indeed between 2000 and 2008, Valley tech companies lost well over 100,000 jobs; even with the current bubble, Silicon Valley’s STEM employment, according to estimates by Economic Modeling Specialists Inc., has only now started to make up for what was lost in the last recession.

    Of course, energy, as well as manufacturing, suffer through cycles, although the opening of the developing world economies has created a vast, and likely permanent, long-term market. New technologies, including fracking and horizontal drilling, also suggest that resources may not erode as quickly as in the past.

    Rather than celebrate or at least coexist with the tangible economy’s power, the tech oligarchs , along with their allies on Wall Street and within the political-media class, seem intent on stamping them out. One manifestation of this alliance could be seen in the recent pronunciamento against the Keystone Pipeline signed by three prominent oligarchs: Bay Area hedge fund manager Tom Steyer, retiring New York Mayor Michael Bloomberg and former Treasury Secretary Hank Paulson, the designer of the TARP bailouts and first rescuer of Wall Street’s worst miscreants.

    But for some, like the politically connected billionaire Steyer, there’s more to this more than just misguided idealism. Steyer and his allies, such as Google and associated venture firms, have sought to profit mightily by backing renewable energy ventures dependent on regulations mandating their use and guaranteeing high prices.

    The price of this enlightened progressive profit-taking largely falls on working class Californians, and traditional industries, which get stuck with exorbitant energy prices. We can see similar phenomena in New York State, where grandees now finance  much of the anti-fracking movement, joined by academics,  Manhattan glitterati and gentry landowners. In contrast to Pennsylvania and Ohio, where new energy development is sparking manufacturing and opportunities in formerly destitute communities, the anti-fracking band seems destined to keep upstaters the economic equivalent of fat, dumb and pregnant.

    Perhaps we should call the new concert of tech, media and finance “Billionaires for Poverty.” Their approach — backed by the new economists –  leaves most Americans only the prospect of a dim future envisioned, with people huddled together, like our grandparents in small apartments, working at low wages with little hope of advancement. Perhaps some will be satisfied with a higher minimum wage, more digital gadgetry, and an expanded welfare state in lieu of a middle-class existence.

    Instead of waging a senseless economic war that is sure to expand class divisions perhaps the best economic model would be to encourage growth of both the tangible and digital economies.  According to my colleague Mark Schill of the Praxis Strategy Group, the tech and energy sectors employ roughly the same number of people, 2.4 million, and pay around the same average wages, slightly above $100,000.

    Texas has benefited by going after both sectors, something  California as well as New York have disdained to do. Indeed even in tech, Texas is gaining ground, since 2001 adding tech jobs at a much faster pace than than California. The Lone Star state could, at the current rate, equal the Golden State in this critical field within a decade or two.

    But there’s no real competition in the energy sweepstakes. Since 2001 Texas has added some 208,000 jobs in this field, and now employs over 580,000. In contrast California, whose fossil fuel resources may match or even exceed Texas’, has created barely 20,000, for a total of 185,000. Critically, IT work generally employs only college graduates, while the energy industry employs, often at high wages, not only geologists and other highly trained workers but blue-collar workers on rigs, driving trucks, or monitoring equipment.

    Providing broad opportunities for the mass of Americans — not enriching the few, even if they happen to be hip and cool — should be the primary objective in an economy in a democracy. The supremacy of the emerging digital economy may be OK for people at Twitter or Facebook, but how many of the rest of us want our children to grow up with little chance of reaping much from the economy except an updated app that allows them to stay in touch with their largely unemployed or underemployed “friends.”

    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.

    Midwest drilling rig photo by Bigstock.

  • Bipartisan Distrust of the Beltway

    Much has been written and spoken about the deep divide between “red” and “blue” America, but the real chasm increasingly is between Washington and the rest of the country. This disconnect may increase as both conservatives and liberals outside the Beltway look with growing disdain upon their “leaders” inside the imperial capital. Indeed, according to Gallup, trust among Americans toward the federal government has sunk to historic lows, regarding both foreign and domestic policy.

    The debate over Syria epitomizes this division. For the most part, Washington has been more than willing to entertain another military venture. This includes the Democratic policy establishment. You see notables like Anne Marie Slaughter and the New York Times’ Bill Keller join their onetime rivals among the neoconservative right in railing against resurgent “isolationism” on the Right.

    Yet some people, like the Weekly Standard’s Bill Kristol, who pushed for our disaster in Iraq, now insist that turning away from a Syrian involvement would be “disastrous for the nation in very clear ways.”

    Yet, out in the country, where people, even those who (like me) supported Iraq initially, know that that war was not worth the price, in blood, treasure or damage to national unity. The citizens are not remotely interested in getting a second shot of neoconservative disaster in Syria. A recentCNN poll found that seven in 10 would oppose attacking Bashar al-Assad’s regime without congressional approval, which about 60 percent think Congress should not give.

    This is not a partisan consensus, but an outside-the-Beltway one. Liberals, who might be expected to rally behind their president, have remained deeply divided. At the grass-roots level, both left-wing groups, like Moveon.org, and those on the right, notably Tea Party factions, have opposed entering the Syrian quagmire. One liberal writer, utterly confused by the new alignment, admitted he was looking to the “far-right fringe” with its “abominable” nativist and racist views, to “salvage our Syria policy.”

    Similarly, most conservatives who in the past instinctively supported intervention have turned decisively dovish. Increasingly, as one conservative commentator acidly put it, the support for war reflects “an insider urge to use U.S. military power,” which helps “advance the careers of government officials through bigger budgets, new departments and more exposure and influence.” It also helps the think tanks, consulting firms and others who benefit from foreign adventurism.

    Syria suspicions

    This cynicism, felt on both sides of the political chasm, is what doomed the president’s Syria adventure and left him to the tender mercies of Vladimir Putin. Americans in general, suggests the National Interest’s Robert Merry, have concluded that “the country’s elites – of both political parties and across the political spectrum – have been wrong on just about everything they have done since the end of the Cold War.”

    This chasm between the ruled and the rulers has both widened and deepened during the Obama years. Initially, Democrats supported the idea of a strong federal expansion to improve the economy. Yet, as it turned out, the stimulus and other administration steps did little to help the middle and working classes. The Obama economic policy has turned out to be at least as much – if not more – “trickle down” than that of his Republican predecessor.

    Similarly embarrassing, the administration’s embrace of surveillance, as demonstrated by the National Security Agency revelations, has been no less, and maybe greater, than that of former vice president Dick Cheney and his crew of anti-civil libertarians. And it’s been the Left, notably, the British Guardian newspaper, that has led the fight against the mass abuse of privacy. Americans as a whole are more sympathetic to leaker Edward Snowden and increasingly concerned about government intrusions on their privacy. A July Washington Post-ABC News poll found fully 70 percent of Democrats and 77 percent of Republicans said the NSA’s phone and Internet surveillance programs intrude on some Americans’ privacy rights. Nearly six in 10 political independents who saw intrusions said they are unjustified.

    The Right intrinsically opposes expansion of the civilian part of the federal government, but it supported the national security state both during the Cold War and after 9/11. This has now begun to change. The revelations about IRS targeting of Tea Party and other grass-roots groups likely have not reduced their fears of Big Brother. Yet, by better than 2-1, Democrats, according to a Quinnipiac survey, also supported appointing a special prosecutor to get to the bottom of this scandal.

    Beltway boom-times

    Besides shared concerns over Syria, the NSA and IRS, grass-roots conservatives and liberals increasingly reject the conventional wisdom of their Washington betters. What increasingly matters here is not political “spin,” but the breadth of anti-Washington sentiment. After all, while most of the country continues to suffer low economic growth, the Washington area has benefitted from the expansion of federal power. The entire industry of consultants, think tanks, lawyers and related fields, no matter their supposed ideologies, has waxed while the rest of America has waned.

    This has been a golden era for the nation’s capital, perhaps the one place that never really felt the recession. Of the nation’s 10 richest counties, seven are in the Washington area. In 1969, notes liberal journalist Dylan Matthews, wages in the D.C. region were 12 percent higher than the national average; today, they are 36 percent higher. Matthews ascribes this differential not so much to government per se, but on the huge increase in lobbying, which has nearly doubled over the past decade.

    Matthews draws a liberal conclusion, not much different than one a conservative would make, that “Washington’s economic gain may be coming at the rest of the country’s expense.” Washington may see itself as the new role model for dense American cities but this reflects the fact that it’s one of the few places where educated young people the past five years have been able to get a job that pays well.

    This is intolerable to Americans of differing political persuasions. It is not just a detestation of government but also of the Washington-centered media, which has sent some 20 of its top luminaries into an Obama administration that, at least until recently, has managed to spin them better than any of its predecessors. Not surprisingly, along with that of Congress, themedia’s credibility has been crashing to historic lows, with 60 percent expressing little trust in the fourth estate.

    New generation

    These trends might gain velocity as the millennial generation begins to shape American politics. Indeed, although they have supported Obama against his GOP opponents, their activism is more grass-roots than governmentally oriented. Only 6 percent of recent college graduates want to work for government at any level, down from 8 percent in 2008; barely 2 percent would consider joining the federal workforce.

    As generational chroniclers Mike Hais and Morley Winograd point out, millennials – those born from 1983-2003 – tend to be liberal, but not strongly supportive of top-down, administrative solutions. “Millennials,” Winograd notes, “believe in solving national issues at the local, community level. They are as suspicious of large government bureaucracies as any libertarian but as dedicated to economic equality and social justice as any liberal.”

    Winograd’s notion of “pragmatic idealism” might include dispersing power and influence away from Washington. Perhaps, as some have suggested, putting Congress “on the road,” for example, forcing it to legislate, say, at the convention center in Wilkes-Barre, Pa., or Ontario, Calif. Maybe lawmakers might have to confront what life is like for their subjects, who do not live privileged lives funded by our tax dollars. Instead of croissants in Georgetown, let them eat bread and tortillas.

    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.

    This piece originally appeared at The Orange County Register.

  • California’s New Feudalism Benefits a Few at the Expense of the Multitude

    California has been the source of much innovation, from agribusiness and oil to fashion and the digital world. Historically much richer than the rest of the country, it was also the birthplace, along with Levittown, of the mass-produced suburb, freeways, much of our modern entrepreneurial culture, and of course mass entertainment. For most of a century, for both better and worse, California has defined progress, not only for America but for the world.

    As late as the 80s, California was democratic in a fundamental sense, a place for outsiders and, increasingly, immigrants—roughly 60 percent of the population was considered middle class. Now, instead of a land of opportunity, California has become increasingly feudal. According to recent census estimates,  the state suffers some of the highest levels of inequality in the country. By some estimates, the state’s level of inequality compares with that of such global models as  the Dominican Republic, Gambia, and the Republic of the Congo.

    At the same time, the Golden State now suffers the highest level of poverty in the country—23.5 percent compared to 16 percent nationally—worse than long-term hard luck cases like Mississippi. It is also now home to roughly one-third of the nation’s welfare recipients, almost three times its proportion of the nation’s population.

    Like medieval serfs, increasing numbers of Californians are downwardly mobile, and doing worse than their parents: native born Latinos actually have shorter lifespans than their parents, according to one recent report. Nor are things expected to get better any time soon. According to a recent Hoover Institution survey, most Californians expect their incomes to stagnate in the coming six months, a sense widely shared among the young, whites, Latinos, females, and the less educated.

    Some of these trends can be found nationwide, but they have become pronounced and are metastasizing more quickly in the Golden State. As late as the 80s, the state was about as egalitarian as the rest of the country. Now, for the first time in decades, the middle class is a minority, according to the Public Policy Institute of California.

    The Role of the Tech Oligarchs.

    California produces more new billionaires than any place this side of oligarchic Russia or crony capitalist China. By some estimates the Golden State is home to one out of every nine of the world’s billionaires. In 2011 the state was home to 90 billionaires, 20 more than second place New York and more than twice as many as booming Texas.

    The state’s digital oligarchy, surely without intention, is increasingly driving the state’s lurch towards feudalism. Silicon Valley’s wealth reflects the fortunes of a handful of companies that dominate an information economy that itself is increasingly oligopolistic.  In contrast to the traditionally conservative or libertarian ethos of the entrepreneurial class, the oligarchy is increasingly allied with the nominally populist Democratic Party and its regulatory agenda. Along with the public sector, Hollywood, and their media claque, they present California as “the spiritual inspiration” for modern “progressives” across the country.

    Through their embrace of and financial support for the state’s regulatory regime, the oligarchs have made job creation in non tech-businesses—manufacturing, energy, agriculture—increasingly difficult through “green energy” initiatives that are also sure to boost already high utility costs. One critic, state Democratic Senator Roderick Wright from heavily minority Inglewood, compares the state’s regulatory regime to the “vig” or high interest charged by the Mafia, calling it a major reason for disinvestment in many industries.

    Yet even in Silicon Valley, the expansion of prosperity has been extraordinarily limited. Due to enormous losses suffered in the current tech bubble, tech job creation in Silicon Valley has barely reached its 2000 level. In contrast, previous tech booms, such as the one in the 90s, doubled the ranks of the tech community. Some, like UC Berkeley economist Enrico Moretti, advance the dubious claim that those jobs are more stable than those created in Texas. But even if we concede that point for the moment,  the Valley’s growth primarily benefits its denizens but not most Californians. Since the recession, California remains down something like 500,000 jobs, a 3.5 percent loss, while its Lone Star rival has boosted its employment by a remarkable 931,000, a gain of more than 9 percent.

    Much of this has to do with the changing nature of California’s increasingly elite-driven economy. Back in the 80s and even the 90s, the state’s tech sector produced industrial jobs that sparked prosperity not only in places like Palo Alto, but also in the more hardscrabble areas in San Jose and even inland cities such as Sacramento. The once huge California aerospace industry, centered in Los Angeles, employed hundreds of thousands, not only engineers but skilled technicians, assemblers, and administrators.

    This picture has changed over the past decade. California’s tech manufacturing sector has shrunk, and those employed in Silicon Valley are increasingly well-compensated programmers, engineers and marketers. There has been little growth in good-paying blue collar or even middle management jobs. Since 2001 state production of “middle skill” jobs—those that generally require two years of training after high-school—have grown roughly half as quickly as the national average and one-tenth as fast as similar jobs in arch-rival Texas.

    “The job creation has changed,” says Leslie Parks, a long-time San Jose economic development official. “We used to be the whole food chain and create all sorts of middle class jobs. Now, increasingly, we don’t design the future—we just think about it. That makes some people rich, but not many.”

    In the midst of the current Silicon Valley boom, incomes for local Hispanics and African-Americans, who together account for one third of the population, have actually declined—18 percent for blacks and 5 percent for Latinos between 2009 and 2011, prompting one local booster to admit that “Silicon Valley is two valleys. There is a valley of haves, and a valley of have-nots.”

    The Geography of Inequality

    Geography, caste, and land ownership increasingly distinguish California’s classes from one another. As Silicon Valley, San Francisco, and the wealthier suburbs in the Bay Area have enjoyed steady income growth during the current bubble, much of the state, notes economist Bill Watkins, endures Depression-like conditions, with stretches of poverty more reminiscent of a developing country than the epicenter of advanced capitalism.

    Once you get outside the Bay Area, unemployment in many of the state’s largest counties—Sacramento, Los Angeles, Riverside, San Bernardino, Fresno, and Oakland—soars into the double digits. Indeed, among the 20 American cities with the highest unemployment rates, a remarkable 11 are in California, led by Merced’s mind-boggling 22 percent rate.

    This amounts to what conservative commentator Victor Davis Hanson has labeled “liberal apartheid,” a sharp divide between a well-heeled, mostly white and Asian population located along the California coast, and a largely poor, heavily Latino working class in the interior. But the class divide is also evident within  the large metro areas, despite their huge concentrations of affluent individuals. Los Angeles, for example, has the third highest rate of inequality of the nation’s 51 largest metropolitan areas, and the Bay Area ranks seventh.

    The current surge of California triumphalism, trumpeted mostly by the ruling Democrats and their eastern media allies, seems to ignore the reality faced by residents in many parts of the state. The current surge of wealth among the coastal elites, boosted by rises in property, stock, and other assets, has staved off a much feared state bankruptcy. Yet the the state’s more intractible problems cannot be addressed if growth remains restricted to a handful of favored areas and industries. This will become increasingly clear when, as is inevitable, the current tech and property boom fades, depriving the state of the taxes paid by high income individuals.

    The gap between the oligarchic class and everyone else seems increasingly permanent. A critical component of assuring class mobility, California’s once widely admired public schools were recently ranked near the absolute bottom in the country. Think about this: despite the state’s huge tech sector, California eighth graders scored 47th out of the 51 states in science testing. No wonder Mark Zuckerberg and other oligarchs are so anxious to import “techno coolies” from abroad.

    As in medieval times, land ownership, particularly along the coast, has become increasingly difficult for those not in the upper class. In 2012, four California markets—San Jose, San Francisco, San Diego, and Los Angeles—ranked as the most unaffordable relative to income in the nation. The impact of these prices falls particularly on the poor. According to the Center for Housing Policy and National Housing Conference, 39 percent of working households in the Los Angeles metropolitan area spend more than half their income on housing, as do 35 percent in the San Francisco metro area—both higher than 31 percent in the New York area and well above the national rate of 24 percent. This is likely to get much worse given that California median housing prices rose 31 percent in the year ending May 2013. In the Bay Area the increase was an amazing 43 percent.

    Even skilled workers are affected by these prices. An analysis done for National Core, a major developer of low income housing, found that prices in such areas as Orange County are so high that even a biomedical engineer earning more than $100,000 a year could not afford to buy a home there. This, as well as the unbalanced economy, has weakened California’s hold on aspirational families, something that threatens the very dream that has attracted  millions to the state.

    This is a far cry from the 50s and 60s, when California abounded in new owner-occupied single family homes. Historian Sam Bass Warner suggested that this constituted “the glory of Los Angeles and an expression of its design for living.” Yet today the L.A. home ownership rate, like that of New York, stands at about half the national average of 65 percent. This is particularly true among working class and minority households. Atlanta’s African-American home ownership rate is approximately 40 percent above that of San Jose or Los Angeles, and approximately 50 percent higher than San Francisco.

    This feudalizing trend is likely to worsen due to draconian land regulations that will put the remaining stock of single family houses ever further out of reach, something that seems related to a reduction in child-bearing in the state. As the “Ozzie and Harriet” model erodes, many Californians end up as modern day land serfs, renting and paying someone else’s mortgage. If they seek to start a family, their tendency is to look elsewhere, ironically even in places such as Oklahoma and Texas, places that once sent eager migrants to the Golden State.

    Breaking Down the New Feudalism: The Emerging Class Structure

    The emerging class structure of neo-feudalism, like its European and Asian antecedents, is far more complex than simply a matter of the gilded “them” and the broad “us.” To work as a system, as we can now see in California, we need to understand the broader, more divergent class structure that is emerging.

    The Oligarchs: The swelling number of billionaires in the state, particularly in Silicon Valley, has enhanced power that is emerging into something like the old aristocratic French second estate. Through public advocacy and philanthropy, the oligarchs have tended to embrace California’s “green” agenda, with a very negative impact on traditional industries such as manufacturing, agriculture, energy, and construction. Like the aristocrats who saw all value in land, and dismissed other commerce as unworthy, they believe all value belongs to those who own the increasingly abstracted information revolution that has made them so fabulously rich.

    The  Clerisy: The Oligarchs may have the money, but by themselves they cannot control a huge state like California, much less America. Gentry domination requires allies with a broader social base and their own political power. In the Middle Ages, this role was played largely by the church; in today’s hyper-secular America, the job of shaping the masses has fallen to the government apparat, the professoriat, and the media, which together constitute our new Clerisy. The Clerisy generally defines societal priorities, defends “right-thinking” oligarchs, and chastises those, like traditional energy companies, that deviate from their theology.

    The New Serfs: If current trends continue, the fastest growing class will be the permanently property-less. This group includes welfare recipients and other government dependents but also the far more numerous working poor. In the past, the working poor had reasonable aspirations for a better life, epitomized by property ownership or better prospects for their children. Now, with increasingly little prospect of advancement, California’s serfs depend on the Clerisy to produce benefits making their permanent impoverishment less gruesome. This sad result remains inevitable as long as the state’s economy bifurcates between a small high-wage, tech-oriented sector, and an expanding number of lower wage jobs in hospitality, health services, and personal service jobs. As a result, the working class, stunted in their drive to achieve the California dream, now represents the largest portion of domestic migrants out of the state.

    The Yeomanry: In neo-feudalist California, the biggest losers tend to be the old private sector middle class. This includes largely small business owners, professionals, and skilled workers in traditional industries most targeted by regulatory shifts and higher taxes. Once catered to by both parties, the yeomanry have become increasingly irrelevant as California has evolved into a one-party state where the ruling Democrats have achieved a potentially permanent, sizable majority consisting largely of the clerisy and the serf class, and funded by the oligarchs. Unable to influence government and largely disdained by the clerisy, these middle income Californians are becoming a permanent outsider group, much like the old Third Estate in early medieval times, forced to pay ever higher taxes as well as soaring utility bills and required to follow regulations imposed by people who often have little use for their “middle class” suburban values.

    The Political Implications of Neo-Feudalism

    As Marx, among others, has suggested, class structures contain within them the seeds of their dissolution. In New York, a city that is arguably as feudal as anything in California, the  emergence of mayoral candidate Bill de Blasio reflected growing  antagonism—particularly among the remaining yeoman and serf class— towards the gentry urbanism epitomized by Mayor Michael “Luxury City” Bloomberg.

    Yet except for occasional rumbling from the left, neo-feudalism likely represents the future. Certainly in California, Gov. Jerry Brown, a former Jesuit with the intellectual and political skills needed to oversee a neo-feudal society, remains all but unassailable politically. If Brown, or his policies, are to be contested, the challenge will likely come from left-wing activists who find his policies insufficiently supportive of the spending demanded by the clerisy and the serfs or insufficiently zealous in their pursuit of environmental purity.

    The economy in California and elsewhere likely will determine the viability of neo-feudalism. If a weaker economy forces state and local government budget cutbacks, there could be a bruising conflict as the various classes fight over diminishing spoils. But it’s perhaps more likely that we will see enough slow growth so that Brown will be able to keep both the clerisy and the serfs sufficiently satisfied. If that is the case, the new feudal system could shape the evolution of the American class structure for decades to come.

    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.

    This piece originally appeared at The Daily Beast.

     

  • Democratic “Upstairs-Downstairs” Coalition at Risk

    Michael Bloomberg’s passing from New York City Hall, and his likely replacement as mayor by a fire-breathing populist Democrat, Bill de Blasio, marks a historic shift, not just in urban politics but, potentially, also national politics. For 20 years, under first Rudy Giuliani and then Bloomberg, New Yorkers accepted a form of “trickle down economics” where Wall Street riches flowed into city coffers and kept Gotham, at least on the surface, humming and solvent.

    That period ended with Tuesday’s election, and with it, the unraveling of one of the great contradictions in modern American politics: the melding of liberalism with a plutocratic elite. Bloomberg epitomized this synthesis, and with his departure, the formula of blending social and “luxury city” liberalism now appears to have run its course. Bloomberg himself appears to have realized the jig could be up, last weekend accusing de Blasio of running a racist campaign based on “class warfare.”

    But for the American Left, now emerging from its Obamian slumbers, de Blasio’s focus on class has also turned him into a national hero. The Nation hails de Blasio as the harbinger of “the rebirth of economic liberalism.” He has won the backing of the magazine’s influential publisher, Katrina van den Heuvel, as well maverick plutocrat-progressive George Soros and former Vermont Gov. Howard Dean.

    To be sure, class warfare has made de Blasio. His plans to raise more taxes from the rich appeals both to the middle class and, more importantly, to the poor and near poor. Those last two groups account for nearly half the “luxury city’s” population. The same middle class New Yorkers who may have voted for a hard-edged Republican, like Giuliani, or a pragmatic billionaire, like Bloomberg, when they feared for their lives and simply wanted the city cleaned up. They now are more concerned with economic issues. De Blasio was the one New York politician to understand the sea change.

    “This election is not going to be about crime, as some previous elections were,” de Blasio told National Journal last month. “It used to be, in New York you worried about getting mugged. But today’s mugging is economic. Can you afford your rent?”

    His argument is sticking, in large part, because perhaps nowhere are the limitations of gentry urbanism so obvious as in New York. The wealth of Wall Street, protected by the tax code and bathed in Bernanke bucks, has expanded inequality. As Wall Streeters have partied, most New Yorkers have not done well. Indeed, according to a recent study by University of Washington demographer Richard Morrill, the once-proudly egalitarian city has become the most unequal big city in the country, worse even than the most racially divided, historically underdeveloped Southeast.

    Here are the facts. In New York, the top 1 percent earns roughly twice as much of the local GDP than is earned in the rest of country. Yet, controlling for costs, the average paycheck is among the lowest in the nation’s 51 largest metro areas, behind not only San Jose, but Houston, Raleigh, N.C., and a host of less-celebrated burgs. There’s only so much middle-class families can do when the cost of living in Manhattan is twice the national average, and the median Manhattan apartment price about $4,000 a month. These economic facts, not crime or mayhem in the streets, explains why, since 2000, the region has lost the most net domestic migrants – some 1.9 million – in the country, sending along $50 billion elsewhere, almost $15 billion in household income just to Florida, the most common destination.

    National leftward shift

    The de Blasio triumph is not solely a New York story. Nationally, this opens a new chapter in the evolution of the American Left. If de Blasio continues his surge and becomes the first openly leftist New York mayor in a generation, the pressure to shift Democratic Party politics to the left could become as inexorable as the Tea Party’s shove to the right has been for the Republicans.

    Like the Republican schism, about which much has been written, the reason for the Democratic lurch to the left is grounded in class realities. In the GOP case, the Tea Party derives support from largely unconnected middle- and working-class Republicans, as opposed to country club or corporate types. For its part, the modern Democratic Party fuses two dissimilar groups: the “upstairs” well-educated gentry, with their urbanist and green politics, and the broader, but less-influential “downstairs” working-class element, concerned about jobs, making more money and likely aspiring to own a home in the suburbs.

    Now that they don’t have to toe the line for another Obama presidential run, leftist Democrats, including what’s left of the labor movement, are less compelled to defend his economic record. Under the current administration, already-troublesome income inequality in the country has been accelerating, to the benefit primarily of the vilified 1 percent. Race, which has served as a rallying cry for both white liberal and minority Democratic voters, likely will lose some of its appeal now that the first African-American president will not appear on the ballot.

    Conflicts loom

    This conflict between populist and gentry factions figures to arise over a host of issues in months to come. One looming issue may be the Keystone XL pipeline, favored by most private-sector unions, but vehemently opposed by greens and their gentry allies. President Obama may find that parts of his party, particularly in the inland West, the Great Plains, Louisiana and Appalachia, care more about jobs than environmental purity.

    Another flash point may emerge over who Obama will choose as head of the Federal Reserve. Wall Street favors Larry Summers, a convenient ally to Obama, whose relations with high finance are complicated by his occasional flights of populist fancy. But, big-business ties and Summers’ role in deregulation during the Clinton era arouse suspicion among more hard-left Congress members; already three left-leaning Democratic senators – Jeff Merkley of Oregon, Sherrod Brown of Ohio and Elizabeth Warren of Massachusetts – appear to oppose a Summers nomination.

    Expect more of this in the future. Some labor unions, including the powerful Teamsters and UNITE, now fear their health care coverage could be sacrificed under Obamacare. The most powerful force in urban Democratic politics, public employees, fear they may be caught between efforts, most notably in Detroit and, possibly, the president’s adopted hometown, Chicago, to revive cities by ransacking their pensions. This may occur even as powerful real estate and corporate interests – primary funders of gentry urbanism – win subsidies from taxpayers for their ambitious plans.

    These contradictions within the Democrats’ unwieldy “upstairs-downstairs” coalition have been papered over for years by focusing on social and racial issues. They were often aided by Republicans, seemingly always looking for ways to alienate persuadable voters. Democrats, like de Blasio, may find that waging class warfare returns more than running on troublesome issues like climate change, guns, hygienic fascism (a Bloomberg specialty) or abortion; in some surveys, a majority of Americans favor some form of redistribution of wealth.

    Unless there is a change in the country’s economic direction, growing inequality could undermine the unnatural marriage of the gentry and the Left. In retrospect, the real political genius of Barack Obama has been to keep this contradictory coalition intact through his image, mastery of media and rhetoric. But, as the post-Bloomberg reality in New York suggests, at some point even the most agile politician can not keep fundamental social conflict swept under the rug forever.

    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.

    This piece originally appeared at The Orange County Register.

    Photo courtesy of Bill de Blasio.

  • America’s Fastest-Growing Counties: The ‘Burbs Are Back

    For nearly a half century, the death of suburbs and exurbs has been prophesied by pundits, urban real-estate interests and their media allies, and they ratcheted up the volume after the housing crash of 2007. The urban periphery was destined to become “the next slums,” Christopher Leinberger wrote in The Atlantic in 2008, while a recent book by Fortune’s Leigh Gallagher, The End of Suburbsclaimed that suburbs and exurbs were on the verge of extinction as people flocked back to dense cities such as New York.

    This has become a matter of faith even among many supposed development professionals. “ There’s a pall being cast on the outer edges,” John McIlwain, a fellow at the Urban Land Institute, told USA Today. “The foreclosures, the vacancies, the uncompleted roads. It’s uncomfortable out there. The glitz is off.”

    Yet an analysis by demographer Wendell Cox of the counties with populations over 100,000 that have gained the most new residents since 2010 tells us something very different: Suburbs and exurbs are making a comeback, something that even the density-obsessed New York Times has been forced to admit. Of the 10 fastest-growing large counties all but two — Orleans Parish, home to the recovering city of New Orleans, and the Texas oil town of Midland— are located in the suburban or exurban fringe of major metropolitan areas.

    Fastest Growiing US Counties: 2010-2012
    Counties over 100,000 Population
    Rank County Equivalent Jurisdiction Growth
    1 Williamson, TX 7.94%
    2 Loudoun, VA 7.87%
    3 Hays, TX 7.56%
    4 Orleans, LA 7.39%
    5 Fort Bend, TX 7.16%
    6 Midland, TX 7.14%
    7 Forsyth, GA 7.07%
    8 Montgomery, TN 7.04%
    9 Prince William, VA 7.04%
    10 Osceola, FL 6.97%

     

    Not surprisingly several of these fast-growth areas are in burgeoning Texas metro areas. The population of Williamson County, on the outskirts of Austin, has expanded 7.94% since 2010, the strongest growth in the nation over that period. Far from turning into a slum, over the past 25 years the county’s residents have enjoyed the Lone Star state’s fastest rate of income growth and the sixth-highest in the nation. With a strong tech scene – Dell is headquartered in the Williamson town of Round Rock — the county has increased employment by 73% since 2000, the third highest rate in the country.

    Another Austin outer suburb, Hays County, ranks third on our list, with population growth of 7.6% since 2010 and 67% since 2000. Also impressive has been the growth of another Texas exurb, Fort Bend County, to the west of Houston.

    Since 2010 the county’s population has grown 7.2%, and since 2000 employment has increased 78%, in part due to the expansion of energy companies outside Houston. Fort Bend County is now home to 625,000 people, considerably more than the total population of most major core cities, including Atlanta, Cleveland, Baltimore and Portland. Like many of the boom counties, Fort Bend is alsoincreasingly diverse, with a rapidly growing Asian population that is approaching 20% of the total. It is now the unlikely home to one of the nation’s largest Hindu temples.

    In second place is Loudoun County, 25 miles from Washington, D.C., where the population has expanded 7.87% since 2010 and the number of jobs has grown 83% over the past decade. Much of this has come from tech and telecommunications companies, as well as growing numbers of jobs tied to Dulles Airport as well as the nation’s capital.

    They are not on the road to “next slum” status: Loudoun is one of the nation’s wealthiest counties. Another D.C. exurb on our list in ninth place, Prince William County, Va., ranks among America’s 10 wealthiest counties in terms of per capita income.Most of the other fastest-growing counties have a similar profile, attracting large numbers well-educated residents to the fringe of urban regions.

    What these findings demonstrate is that more people aren’t moving “back to the city” but further out. In the last decade in the 51 largest U.S. metropolitan areas, inner cores, within two miles of downtown, gained some 206,000 people,  while locations 20 miles out gained over 8.5 million. Although the recession slowed exurban growth, since 2011, notes Jed Kolko at Trulia, suburbs have continued to grow far faster than inner ring areas as well as downtown. Americans, he concludes, “still love their suburbs.”

    Rather than an inevitable long-range shift, the post-crash slowdown of suburban growth seems to have been largely a response to economic factors. The retro-urbanist dream of eliminating, or at least undermining, suburban alternatives depends very much on maintaining recessionary conditions that discourage relocation, depress housing starts, as well as lowering marriage and birthrates.

    Where incomes are growing along with rapid job growth , suburban and exurban growth tends to be strong.  The metro regions that contain our fastest-growing counties — Austin, Houston, Nashville and Northern Virginia — all epitomize this phenomenon. For example, nearly 80% of all housing growth in greater Houston takes place in the areas west of Beltway 8 (the outer beltway). A similar pattern can be seen in the D.C. area, where the number of units permitted in Loudoun has more than doubled since 2007. In 2012 permit issuances were the highest since 2005, and the vast majority were for either detached or attached single-family houses.

    This doesn’t mean the central areas of  thriving Washington or Houston are in decline; both core areas    enjoy modest population growth not seen in many more hard-pressed cities. But this highly visible and relentlessly promoted growth has not altered the fundamental pattern of faster development on the fringes.  As the economy strengthens, these trends will become evident in other areas.

    It now seems clear that the preference for single-family houses did not change in the recession, but was just stunted by it. With construction starts up again— more than two-thirds single family — this trend is beginning to re-assert itself. Mortgage lending is now at the highest level in five years.

    Indeed suburbia — or sprawl to use the perjorative term — is back even in the anti-suburban stretches of the San Francisco area, where suburban and exurban developers are once again pushing plans to develop new housing for the area’s expanding workforce. In long-suffering areas such as the Inland Empire, east of Los Angeles, there has been a steady housing recovery, leading to talk of new development.

    Other signs suggest that the widely predicted dense city nirvana may need to be put on hold. For example, car sales  — automobiles dominate transportation in most suburbs and exurbs — have been on the upswing, hitting a record in August. And despite predictions that the size of new homes would shrink, the median home size in the country has continued to rise, reaching a record high in 2012.Even shopping malls, long seen as doomed, are experiencing something of a resurgence.

    Demographic forces should accelerate suburban and exurban growth. As the economy has improved, we are starting to see an uptick in the birthrate, and household formation.

    Given the tendency of families to move to suburbs, this should spark further growth there in the future. High-density neighborhoods and the densest U.S. cities may be good for many things, and certain individuals, but not so much for families. During the last decade, suburbs and exurbs accounted for four-fifths of all household growth, a pattern that does not seem likely to change.

    Indeed, what we are seeing now is not the “end of suburbs” but the end of a brief period in which peripheral development was quashed by the severity of the Great Recession. With the return of even modest economic growth, we can expect that most demographic growth will continue to favor suburbs and exurbs, as has been the case for the better part of the last half century.

    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.

    Georgetown, Texas Town Square photo by Jeffrey W. Spencer.

  • Thinking Outside the Rails on Transit

    To many in the transit business – that is, people who seek to profit from the development and growth of buses, trains and streetcars – Southern California is often seen as a paradise lost, a former bastion of streetcar lines that crossed the region and sparked much of its early development. Today, billions are being spent to revive the region’s transit legacy.

    Like many old ideas that attract fashionable support, this idea, on its surface, is appealing. Yet, in reality, the focus on mass transit, however fashionable, represents part of an expensive, largely misguided and likely doomed attempt to re-engineer the region away from its long-established dispersed, multipolar and auto-dependent form.

    Traditional transit works best when a large number of commuters work in a central district easily accessible by trains or buses. New York and Washington, D.C., where up to 20 percent of the regional workforces labor downtown (the central business district), are ideal for transit. Even in those metropolitan areas, however, the auto is king.

    In contrast, less than 3 percent of Southern Californians work in downtown Los Angeles. Overall, despite all the money sunk into new rail lines around the country, Americans’ transit commuting is overwhelmingly concentrated in a few older “legacy” cities. Altogether, 55 percent of transit work trips are to six core cities: New York, Chicago, Philadelphia, San Francisco, Boston and Washington, and 60 percent of those commutes are to downtown.

    In contrast, in the Los Angeles-Orange County region, barely 6 percent of workers take transit, one-fifth the rate in New York. Yet we’re a bunch of committed strap-hangers compared with Phoenix, Atlanta, Charlotte, N.C., and Dallas-Fort Worth, where, despite surfeits of new trains and streetcars, 2 percent or less of commuters use public transit. Even in Portland, Ore., widely proclaimed the exemplar of new urbanism and transit investment, the percentage of commuters taking transit is less today than in 1980. Portland is now contemplating cutbacks that could eventually eliminate up to 70 percent of its transit service.

    Imposing Past on Future

    This miserable record reflects how trains, a largely 19th century technology, have limited utility in a contemporary setting. Indeed, the only way to make it work, planners insist, is if the population is moved from their low-density neighborhoods to high-density “pack and stack” areas near transit stops, while suburban businesses are dragooned to denser downtown locations. This is the essence of the recently approved Bay Area Plan.

    Although these kinds of strategies have never materially reduced automobile use – the Bay Area Plan itself says automobile use will still increase by 18 percent over 30 years – the bureaucratic logic here is almost Stalinesque in the scope of its social-engineering ambitions. As Bay Area journalist and plan advocate John Wildermuth puts it, people know they should take transit but don’t because it’s very inconvenient. But by forcing three quarters of new residents into dense housing, some with no parking, he reasons, it then will be “easier for them to either give up their cars or, at least, use them a lot less.”

    Yet getting people to change their way of life, as many central planners have discovered, is not as easy as it seems. The highly dispersed San Jose-Silicon Valley area, the economic epicenter of the Bay Area and worldwide information technology, has a commute trip market share barely a third of major metropolitan area average… . Building “one of the longest” light rail systems in the United States in 50 years has barely moved the percentage of transit commuters over the past three decades.

    What the Bay Area Plan will probably accomplish is to boost housing prices ever further out of reach, both in urban areas and in the suburbs. With new single-family development effectively all but banned, prices of homes in the Bay Area already are again rising far faster than the national average and now are approaching two and half times higher, based on income, than in competitor regions such as Salt Lake City, Phoenix, Dallas-Fort Worth, Austin, Tex., Houston or Raleigh, N.C.

    Environmental Imperative?

    Greens and their allies in the high-density housing lobby long have suggested that “peak oil” and rising prices will inevitably drive suburbanites out their cars. But, clearly, recent advances in U.S. oil and natural gas production may have already made this moot. Transit activists increasingly have focused on climate change to justify massive spending on expanding transit and forcing recalcitrant suburbanites from their cars.

    This logic is largely based on the notion that suburbanites must travel greater distances to work. Yet, a study by McKinsey & Co. and the Conference Board found that – largely because of the impact of higher energy standards for cars forecast by the Department of Energy – sufficient greenhouse gas emission reductions can be achieved without reducing driving or necessitate “a shift to denser urban housing.”

    The fundamental limitations of transit in dispersed cities further weakens environmentalists’ claim. Ridership on some transit systems is so sparse that cars are more energy efficient. Then, there’s the oft-mistaken assumption that higher-density housing will reduce congestion and travel. But in multipolar areas like Southern California, traffic congestion and resultant pollution generally becomes worse with higher density.

    There may be other, more technologically savvy ways to reduce emissions and energy use. People have cut automobile use the past three years but their reduced travel is not showing up so much in transit usage, but, rather, is driven by other factors such as unemployment and the high price of gasoline.

    But, arguably the biggest reduction can be traced to the rise of telecommuting. Over the past decade, the country added some 1.7 million telecommuters, almost twice the much-ballyhooed increase of 900,000 transit riders. In Southern California, the number of home-based workers grew 35 percent, three times the increase for transit usage. By 2020, according to projections from demographer Wendell Cox, telecommuting should pass transit, both nationally and in this region, in total numbers.

    What About the Poor?

    Perhaps the most compelling argument for transit stems from serving those populations – the poor, students, minorities – who often lack access to a private car. Yet, for workers in newer cities, public transit often is not an effective alternative. Brookings Institution research indicates that less than 5 percent of the jobs in the Los Angeles and Riverside-San Bernardino areas are within reach of the average employee within 45 minutes, using transit. The figure is less than 10 percent in the San Jose metropolitan area, the same percentage as for cities nationwide. Moreover, 36 percent of entry-level jobs are completely inaccessible by public transit.

    Not surprisingly, roughly three in four poorer workers use cars to get to work. Recent work by University of Southern California researcher Jeff Khau finds that car ownership is positively correlated with job opportunities; no such relationship can be proven with access to transit.

    At the same time, we should look at more-flexible systems, notably, expanded bus and bus rapid transit, which work better in dispersed areas and are less costly. Most rail systems tend to cannibalize most of their riders from existing bus lines, which explains the small net increases in total transit ridership.

    Transit too expensive

    Costs matter, and will become more important as cities and counties face the looming threat of fiscal defaults. In this respect, rail systems essentially steal from other transit – notably, the buses used mostly by the poor – and from hard-pressed city and county general-fund budgets. Gov. Jerry Brown’s outrageously expensive high-speed rail, which will principally serve the affluent, takes this unfairness to an extreme.

    Instead, we should push far more cost-effective ways to provide transportation options, including those from the private sector, such as the successful Megabus, which provides efficient, quicker and far-less expensive transport between cities than either existing rail or short-haul airline flights. USC’s Khau suggests the private sector also could enhance solutions for lower-income commuters through car loans and car-sharing services such as ZipCar and and Lyft, a mobile app that links riders with drivers.

    As we attempt to figure out ways to improve both the environment and people’s economic prospects, innovative 21st century solutions – from telecommuting to car-sharing – may prove more effective than relying on the 19th century technology of rail. We should not blindly follow transit ideology but focus on how to improve people’s mobility in ways other than the overpriced, inefficient and often far-less-equitable solutions being bandied about today.

    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.

    This piece originally appeared at The Orange County Register.

    Photo by biofriendly, Metro Bus Campaign, Los Angeles

  • The Next Urban Crisis, And How We Might Be Able To Avoid It

    Urban boosters are rightly proud of the progress American cities have made since their nadir in the 1970s; Harvard economist Ed Glaeser has gone so far as to proclaim “the triumph of the city.” Yet recent events — notably Detroit’s bankruptcy and the victory of left-wing populist Bill de Blasio in the Democratic primary of the New York mayoral election — suggest that the urban future may prove far more problematic than commonly acknowledged.

    Detroit’s bankruptcy revealed the unsustainable fiscal problems facing most major urban centers, including, most importantly, President Obama’s political base of Chicago. This summer, Moody’s downgraded the Windy City’s credit rating three notches, noting the unsustainable nature of its pension obligations. Some 37 cities have filed for bankruptcy since 2010, most of them small, and as many as 20 others may be on the verge, including larger places like the California cities of Oakland and Fresno, and Providence, R.I.

    My hometown of Los Angeles may not be far behind. Perhaps the most union-dominated big city in America, the City of Angels’ pension obligations have gone from 3% of the city budget a decade ago to 18% last year. They are rising at a phenomenal 25% annual rate, according to a recent report by an independent watchdog, California Common Sense.

    Given this background, the political tides in New York suggest a worsening of the crisis. Thanks to the Bernanke-inspired Wall Street boom, the New York economy has not suffered the extreme fiscal distress of other big cities. But its fiscal condition is far worse than Mayor Michael Bloomberg and his well-oiled media machine might suggest. Under Bloomberg city spending grew 55% while pension costs have grown 300%.

    With de Blasio likely to be the next mayor, we can expect the bleeding to get worse. Many business people rightly fear a de Blasio’s administration will raise taxes in order to meet public employee demands. Faced with financial shortfalls, de Blasio’s response, notes historian Fred Siegel, is likely to be similar to that of his hero, former Mayor David Dinkins, who consistently gave in to public unions and raises taxes.

    But it’s not enough to dismiss de Blasio as a throwback. His victory reveals the depth of a profound social crisis beneath the glitz and glitter of Bloomberg’s luxury city. Similar class and geographic divisions can be seen throughout the country but inequality seems most egregious in New York. A recent analysis of inequality by University of Washington demographer Richard Morrill found New York to be the least egalitarian big metro area in America.

    This is borne out by other research: the New York City comptroller’s office found that the top 1% account for roughly a third of Gotham’s income, twice as high a share as in the rest of the country. Incomes have surged on Wall Street but most New Yorkers — two-thirds of whom are racial minorities — have struggled to keep pace. Controlling for cost, in fact, the New Yorker’s average paycheck is among the lowest among the nation’s 51 largest metro areas. Nearly half the city’s residents, notes theNation, are either below the poverty line or just above it.

    Bloomberg’s policy focus on ultra-dense development geared to Wall Street, the global rich, and the needs of the all-powerful, largely Manhattan real estate community has done very little for the vast majority of New Yorkers. This reality has lent credibility to de Blasio’s “tale of two cities ” stump speech and the growing rejection of Bloomberg’s legacy.

    Not that all of this can be laid at Bloomberg’s feet. New York’s economy has been changing for decades. New York of the 1950s was a manufacturing, trade and fashion superpower, employing hundreds of thousands of middle- and working-class residents. Large corporations employed large numbers of white- and pink-collar workers. This made New York, although always with its extremes, still a very middle- and working-class city.

    New York’s blue-collar economy has withered to a degree unmatched in most other U.S. cities. The port, the city’s original raison d’etre , lost its primacy to Los Angeles-Long Beach by 1980 and now ranks third in cargo value behind Houston-Galveston as well. The manufacturing sector, which employed a million in 1950, has shriveled to 73,000 jobs today (note that a small part of the decline is due to the BLS’ reclassification of some jobs to other sectors, and other statistical changes). Manufacturing employment in NYC has shrunk 39% since 2004, the worst performance of any major metropolitan area.

    A similar, albeit less dramatic decline has occurred in white-collar employment, in part due to the movement of large companies out of the city. In 1960 New York City boasted one out of every four Fortune 500 firms; today there are 46. And even among those keeping their headquarters in Gotham, many have shipped most of their back office operations elsewhere. Employment has even dropped in the “booming” financial sector, down 7.4% since 2007. The big employment gains have been almost entirely concentrated in the low-wage hospitality and retail sectors.

    If inequality is now greater in New York, the overall economic situation in other cities is, if anything, worse. New York at least has Wall Street, media and a constant infusion of wealth from the rest of world to keep its economy going and stave off the bond-holders. Yet even New York’s economy is underperforming its periphery. The city’s unemployment rate is 8.7% while the surrounding suburbs stand at 7.5%. This gap exists in almost all major metropolitan areas ; among the 51 largest metros the core unemployment rate is 8.8 percent compared to 7.1% in the suburbs.

    The gap is wider in other major cities. In the Chicago area, unemployment in the city is 2 percentage points higher than in the suburbs; in Los Angeles, the city unemployment rate is near 12%, three points higher than in suburbs. This, of course, all pales to Detroit where the city jobless rate stands at over 18% compared to 10% in the suburbs.

    Rather than “cure poverty” or export it to the suburbs, as is regularly claimed, cities retain a poverty rate twice as high as in the suburbs. And although hipsters and the global rich dominate media coverage, the vast majority of the population growth in urban cores over the past decade — upward of 80% — has come not from hipsters but the poor.

    These woes have been largely ignored by the press, but, as de Blasio’s primary victory shows, cannot be hidden forever. True, big investments aimed at attracting the “hip and cool” urban element have helped real estate speculators in selected districts, but has precious little positive impact on the neighborhoods where most urbanities reside.

    Unless addressed, the inequality in core cities suggests a similar lurch to the left could be seen in other cities. What is needed now is a new strategy that promotes the kind of broad-based economic growth that would make the urban “triumph” more than an empty one.

    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.

    Photo courtesy of Bill de Blasio.

  • City Leaders Are in Love With Density but Most City Dwellers Disagree

    People care deeply about where they live. If you ever doubt that, remember this: they staged massive protests over a park in Istanbul. Gezi Park near Taksim Square is one of that ancient city’s most beloved spots. So in June, when Prime Minister Recep Tayyip Erdogan threatened to demolish the park to make room for his grandiose vision of the city as “the financial center of the world,” the park’s neighbors and supporters took to the streets. The protests were directed against what has been described as “authoritarian building”—the demolition of older, more-human-scaled neighborhoods in favor of denser high-rise construction, massive malls, and other iconic projects.

    Other protests, usually more peaceful, but sparked by a similar revulsion against gigantism, have erupted in cities as various as Sao Paolo, Singapore, and Los Angeles. But what is most striking are the eerily similar reactions of mayors, city planners, architects, and developers, all of whom seem remarkably tone deaf to the wishes of their constituents.

    New York’s Mayor Michael Bloomberg, for example, is a tireless advocate for more density in the Big Apple. Along with many of the world’s leading academic, media, and real estate leaders, Bloomberg dreams of a future where urban dwellers live cheek by jowl in ever-closer proximity. Bloomberg’s notions are supported not only by developers but also a large cadre of academics, such as Columbia University’s Kenneth Jackson, who considers dissent from the mayor’s plans an affront to “Gotham’s towering ambitions” by reactionary “opponents of change.”

    There’s just one problem with this brave new condensed world: most urban residents aren’t crazy about it. In the United States and elsewhere, people, when asked, generally say they prefer less dense, less congested places to live. The grandiose vision of high-rise, high-density cities manifestly does not respond to the actual needs and desires of most people, who continue to migrate to the usually less congested, and often less expensive, periphery. And as the people’s desires continue to run counter to what those in power dictate, the urban future is likely to become increasingly contentious.

    Protests over urban development priorities similar to Istanbul’s occurred earlier this year in São Paulo, where the government is accused of putting mega-projects ahead of basic services such as public transport, education, and health care, particularly in the run-up to the 2014 World Cup and the 2016 Olympics.

    Singapore, often held up as a role model for densification, has seen growing concern about the destruction of historic structures, ever-more crowded subways, escalating house prices, and lack of open space. Similarly in Los Angeles, neighborhood councils have rallied against attempts to build denser buildings, which generate more congestion and erode local character. In London, too, attempts to build what the Independent describes as “the tall, the ostentatious, the showy and ‘iconic’” have been widely criticized for undermining the human-scaled nature ofLondon. Densification may be revealed religion to British planners, but this faith is not well accepted by citizens who live nearby. Novelist Will Self noted the “Wizard of Oz–hollowness” of these structures that seek to inspire but also “belittle us” with the mass, scale, and stand against this great city’s historic grain.

    Even in Manhattan, the red-hot center of American ultra-density, eight of the island’s 10 community boards oppose Mayor Bloomberg’s attempts to densify midtown. The midtown project has prompted Yale architect Robert Stern, a devoted urbanist and no opponent of density, to warn that too much high-rise development creates a dehumanized aesthetic that chases away creative businesses and tourists, while preserving older districts attracts them.

    Voting With Their Feet

    The growing disconnect between people and planners is illustrated by the oft-ignored fact that around the world the great majority of growth continues to occur on the suburban and exurban frontier, including the fringes of 23 out of 28 of the world’s megacities. This, notes NYU professor Shlomo Angel in his landmark book A Planet of Cities, is true both in developing and developed countries.

    In Europe, immigration has slightly boosted populations in urban cores, but the flow of domestic migration still heads towards the periphery. The evidence is even more telling in the U.S. In the last decade, nearly 90 percent of all metropolitan growth in this country took place in suburban locations, up from the previous decade. At the same time, a net 3.5 million people left our largest metropolitan areas—those over 10 million—while the majority of growth took place in cities under 2.5 million. Between 2000 and 2010, a net 1.9 million left New York, 1.3 million left Los Angeles, 340,000 left San Francisco, and 230,000 left both San Jose and Boston.       

    This is not what you read regularly in the New York Times or the Wall Street Journal. Young reporters, virtually all of whom live in dense, expensive places like New York or Washington, believe the world is the one they know first-hand, the one in which they and their friends reside. Yet most Americans are not young, highly educated Manhattan residents. Many downtown areas may have experienced a substantial boost in numbers over the last decade, but this accounted for less than 1 percent of the 27 million in population growth experienced by the nation between 2000 and 2010. The total population increase in counties with under 500 people per square mile was more than 30 times that of the increase in counties with densities of 10,000 and greater.

    All of this flies in the face of the argument, made by a well-funded density-boosting industry, that people want more density, not less. Lobbies to force people back into cities enjoy generous funding provided by urban land interests and powerfulmultinationals that build subways and other city infrastructure to bolster the cause of ever greater density.

    These interests speak about cities as if they were giant Lego constructions to be toyed with at the whim of planners or developers. But they neglect the things that matter to people in their daily lives: privacy, room to raise children, the desire for a backyard, decent schools, and safe streets. Roughly four in five home buyers, according to a 2011 study conducted by the National Association of Realtors and Smart Growth America, for example, prefer a single-family home, something that is anathema to the densifiers.

    The Political Economy of Density

    In the Obama era, the cause of densification has gained strong support at HUD, EPA, and other agencies. Yet this is hardly an issue any sane politician—outside New York anyway—wants to run with. People pretty much everywhere naturally resist increasing densification and gigantism—and favor what the Taksim Squareprotesters call a drive for “healthy urbanization and livable city.” 

    Densifiers also claim their work makes cities richer, yet the nation’s greatest wealth-creator—Silicon Valley—is essentially suburban, and the world’s wealthiest metropolitan area—greater Hartford, Connecticut—is largely a collection of bucolic towns and suburbs with a density nearly as low as Atlanta’s. In addition, nearly all urban cores, including New York and Chicago, have considerably higher unemployment rates than their much-dissed suburban rivals. Overall, notes demographer Wendell Cox, 80 percent of the last decade’s urban population growthcame from people below the poverty line, compared with one third in suburbs.

    The new urban densification also shifts the role of the city from an aspirational model to what might be called the geography of inequality. Economists such as Ed Glaeser speak about density as an unalloyed factor in wealth creation, but they rarely factor in such things as cost of living, or in how such factors affect the middle and working classes.  

    Glaeser’s favorite city, New York, is also America’s most unequal metropolis, where the 1 percent earn roughly twice as much of the local GDP than is earned in the rest of country, and where the average paycheck, when controlled for costs, is among the lowest among the nation’s 51 largest metro areas, behind not only San Jose, but Houston, Raleigh, and a host of less celebrated burgs. These inequalities are precisely what opened the door for the previously obscure leftist Bill de Blasio to make his impressive mayoral run. And Gotham’s great rival, London, according to one recent study, now may be the most unequal major city in the Western world.

    Yet rather than re-think density, planners and powerful urban land interests continue to force ever higher-density development down the throats of urban dwellers. In the already pricey San Francisco Bay Area, for example, municipal planners have embraced what is known as a “pack and stack” strategy that will essentially prohibit construction of all but the most expensive single-family homes, prompting one Bay Area blogger to charge that “suburb hating is anti-child,” because it seeks to undermine single-family neighborhoods.

    Unsustainable Post-Familial Cities of Asia

    Perhaps the key measurement of social sustainability is the willingness of people to have children. Historically we fear overpopulation, but increasingly, at least in high-income countries, the real challenges may be over rapid aging and a diminished workforce. There is a countries, the real issue is now below replacement birthrates and rapid aging. High-density environments such as Manhattan, San Francisco, Seattle, Washington, D.C., or Boston invariably have the lowest percentages of children in the country, with Japan-like fertility rates (by 2050 there may well be more Japanese over 80 than under 15).

    The negative impacts of densification are even more evident in the fast-rising cities of the developing world, where most of new high-rise office and residential towers are being erected. In 1980 the world’s 10 tallest buildings were found in New York, Chicago, Houston, and Toronto. Today, only one building in North America—the Sears Tower in Chicago, built in 1973—ranks among the world’s tallest. The rest are located in Dubai, Mecca, Kuala Lumpur, Shenzen, Nanjing, Taipei, Hong Kong, and Shanghai, where the world’s second-tallest building is nearing completion.

    These towers symbolize Asia’s economic ascendency, but they also seem to diminish grassroots economies and discourage family formation. The ultradense cities of East Asia—Hong Kong, Singapore, and Seoul—have among the lowest fertility rates on the planet. Tokyo and Seoul now have fertility rates around one child per family while Shanghai’s has fallen to 0.7, among the lowest ever reported, well below the “one child” mandate and barely one-third the number required simply to replace the current population. Due largely to crowding and high housing prices, 45 percent of couples in Hong Kong say they have given up having children.

    Some Asian urban residents, if they can, now seek to leave these cities—among the most widely praised by urbanists—for more affordable and lower density locales. This is evident in rising emigration from China’s citiesHong Kong, and Singapore, where roughly one in 10 citizens now chooses to settle abroad, mostly in lower density countries like Australia, Canada and the United States.

    To some, this boils down to an issue of health. Dense urbanization, notes a recent Chinese study, engenders more obesity, particularly among the young, who get less exercise, and spend more time desk-bound. Stroke and heart disease have become leading causes of death. These concerns have led, even in authoritarian China, to growing grassroots protests, many of them targeted at new industrial plants located near cities, including Shanghai.

    Perhaps no developing city better reflects the brutalism of Asia’s emerging urban paradigm than Seoul, the densest of the high-income world’s urban areas over 10 million (megacities). The Korean capital is more than 2.5 times as crowded as Tokyo, twice as dense as London and five times as crowded as New York. No surprise then that urban pundits love the place, as epitomized by a glowing report in Smithsonianon Seoul as “the city of the future.” Architects, naturally, join the chorus. In 2010, the International Council of Societies of Industrial Design named the Seoul the “world design capital.”

    Rarely considered, however, is whether this form of urbanization creates a good place for people, particularly families. Korea is already among the unhappiest places on earth, according to a recent  study by the Organization for Economic Cooperation and Development (OECD) and, not surprisingly, suffers a birthrate even lower than Singapore’s.   

    Seoul is, as its boosters claim, fully modern but also both highly congested and aesthetically barren. The result, notes one recent Korean newspaper article is one of the most dehumanized and aesthetically unappealing cities on the planet. MIT architecture professor Lee Kwanghyun charges that over the past decade, development has effectively replaced Seoul’s once unique neighborhoods with seemingly endless blocks of 200-foot high white concrete boxes.     

    Public opposition to this approach has been mounting, and Seoul’s city government recently suspended a “new towns” proposal that sought to knock down the city’s last remaining low-density areas. Not surprisingly, Koreans have been rejecting the hyper-dense core of Seoul, which has lost nearly 1 million residents (10 percent) in 20 years, with residents and migrants from elsewhere in the country heading for the relatively less dense suburbs.

    The City of Disappointment

    The damage done to people by megacity urbanism is most pronounced in poorer countries. My colleague Ali Modarres calls places like Tehran “cities of disappointment.” There, he notes, high housing prices and lack of space have already reduced the birthrate to well below the replacement level, a phenomena he also sees in such unlikely places as urban Tunis, Istanbul, and many otherdeveloping cities in the Islamic world. As in Asia, Modarres says, marriage rates are dropping and increasingly many women are choosing to remain single—heretofore something rare in these countries.

    In cities like Tehran, Modarres says, housing has become equated with living in a small apartment/condominium in a residential building. Rarely does the younger population think about housing in terms of a detached single-story building. And the exorbitant cost of housing in such a high-density city in turn creates constant worries about money and housing—having even one child is prohibitively expensive.

    Gigantism’s effects in the developing world—where much of the most rapid urban growth is now taking place—is even more profound. In Mumbai, home to 20 million people, life expectancy for city residents is at least 10 years below the life expectancy of their country cousins, even though urban residents have much better access to health care. And nearly four of five urban households complain about contaminated water. In 1971, slum dwellers accounted for one in six Mumbai residents. Today, they constitute an absolute majority.

    Indeed, much of the population of most developing country cities—such as Mexico City, Cairo, Jakarta, Manila, Lagos, Mumbai, and Kolkata, megacities all—continue to live in “informal” housing that is often unhygienic, dangerous, and subject to all kinds of disasters, natural or man-made. Moreover, many of these unmanageable megacities—most notably Karachi—offer ideal conditions for gang-led rule and unceasing ethnic conflict.

    Remarkably, many Western pundits find much to celebrate in megacities mushrooming in low-income countries. To them, the growth of megacities is justified because it offers something more than unremitting rural poverty. But surely there’s a better alternative than celebrating slums, as one prominent author did recently inForeign Policy.

    In the mainstream press, there’s even a tendency to engage in what one critic has labeled “slumdog tourism.” A recent National Geographic article, for example, celebrated the entrepreneurial spirit of Kinshasa’s slum dwellers, which is understandable, but underplayed the miserable conditions in which the majority of Kinshasa’s eight million residents are forced to live. That city, which Belgian researchers described as an example of “aborted urban development,” suffers from high crime, poor drinking water, and pervasive informal housing. Similar conditions exist in virtually all of Africa’s largest cities, which are growing as fast as any in the world.

    Toward a Human City

    Rather than concocting sophisticated odes to misery, perhaps we might consider a different approach to urban growth. Perhaps we factor in what exactly we are inflicting on people with “pack and stack” strategies. Planners often link density with community, notes British social critic James Heartfield, but maintaining that “physical proximity that is essential to community is to confuse animal warmth with civilization.” When University of California at Irvine’s Jan Brueckner and Ann Largey conducted 15,000 interviews across the country, they found that for every 10 percent drop in population density, the likelihood of people talking to their neighbors once a week goes up 10 percent, regardless of race, income, education, marital status, or age.  In 2009, Pew recently issued a report that found suburbanites to be the group far more engaged with their communities than those living in core cities.

    A market—or simply human—approach would permit a natural  shift towards smaller, less dense cities and, yes, the suburbs, where more people end up wanting to live. Those who prefer high-density living would still have their opportunity if they so desire. In the developing world, we might to find ways of making villages and smaller cities more attractive, perhaps through the development of local industries, farm-to-market agriculture, and even high-tech development. “We are copying the Western experience in our own stupid and silly way,” says Ashok R. Datar, chairman of the Mumbai Environmental Social Network. “For every tech geek, we have two to three servants. The villages pour out and the city gets more crowded.”

    The primary goal of a city should not be to make wealthy landlords and construction companies ever richer, or politicians more powerful. Instead, we should look for alternatives that conform to human needs and desires, particularly those of families. Urbanism should not be defined by the egos of planners, architects, politicians, or the über-rich, who can cherry-pick the best locales in gigantic cities. Urbanism should be driven above all by what works best for the most people.

    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. 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.

    Skyline photo by Bigstock.

  • America’s True Power In The NAFTA Century

    OK, I get it. Between George W. Bush and Barack Obama we have made complete fools of ourselves on the international stage, outmaneuvered by petty lunatics and crafty kleptocrats like Russia’sVladimir Putin. Some even claim we are witnessing “an erosion of world influence” equal to such failed states as the Soviet Union and the French Third Republic. “Has anyone noticed how diminished, how very Lilliputian, America has become?” my friend Tunku Varadajaran recently asked.

    In reality, it’s our politicians who have gotten small, not America. In our embarrassment, we tend not to notice that our rivals are also shrinking. Take the Middle East — please. Increasingly, we don’t need it because of North America’s unparalleled resources and economic vitality.

    Welcome then to the NAFTA century, in which our power is fundamentally based on developing a common economic region with our two large neighbors. Since its origins in 1994, NAFTA has emerged as the world’s largest trading bloc, linking 450 million people that produce $17 trillion in output. Foreign policy elites in both parties may focus on Europe, Asia and the Middle East, but our long-term fate lies more with Canada, Mexico and the rest of the Americas.

    Nowhere is this shift in power more obvious than in the critical energy arena, the wellspring of our deep involvement in the lunatic Middle East. Massive finds have given us a new energy lifeline in places like the Gulf coast, the Alberta tar sands, the Great Plains, the Inland West, Ohio, Pennsylvania and potentially California.

    And if Mexico successfully reforms its state-owned energy monopoly, PEMEX, the world energy — and economic — balance of power will likely shift more decisively to North America. Mexican President Pena Nieto’s plan, which would allow increased foreign investment in the energy sector, is projected by at least one analyst to boost Mexico’s oil output by 20% to 50% in the coming decades.

    Taken together, the NAFTA countries now boast larger reserves of oil, gas (and if we want it, coal) than any other part of the world. More important, given our concerns with greenhouse gases, NAFTA countries now possess, by some estimates, more clean-burning natural gas than Russia, Iran and Qatar put together. All this at a time when U.S. energy use is declining, further eroding the leverage of these troublesome countries.

    This particularly undermines the position of Putin, who has had his way with Obama but faces long-term political decline. Russia, which relies on hydrocarbons for two-thirds of its export revenues and half its budget, is being forced to cut gas prices in Europe due to a forthcoming gusher of LNG exports from the U.S. and other countries. In the end, Russia is an economic one-horse show with declining demography and a discredited political system.

    In terms of the Middle East, the NAFTA century means we can disengage, when it threatens our actual strategic interests. Afraid of a shut off of oil from the Persian Gulf? Our response should be: Make my day. Energy prices will rise, but this will hurt Europe and China more than us, and also will stimulate more jobs and economic growth in much of the country, particularly the energy belts of the Gulf Coast and the Great Plains.

    China and India have boosted energy imports as we decrease ours; China is expected to surpass the United States as the world’s largest oil importer this year. At the same time, in the EU, bans on fracking and over-reliance on unreliable, expensive “green” energy has driven up prices for both gas  and electricity.

    These high prices have not only eroded depleted consumer spending but is leading some manufacturers, including in Germany, to look at relocating production , notably to energy-rich regions of the United States. This shift in industrial production is still nascent, but is evidenced by growing U.S. manufacturing at a time when Europe and Asia, particularly China, are facing stagnation or even declines. Europe’s industry minister recently warned of “anindustrial massacre” brought on in large part by unsustainably high energy prices.

    The key beneficiaries of NAFTA’s energy surge will be energy-intensive industries such as petrochemicals — major new investments are being made in this sector along the Gulf Coast by both foreign and domestic companies. But it also can be seen in the resurgence in North American manufacturing in automobiles, steel and other key sectors. Particularly critical is Mexico’s recharged industrial boom. In 2011 roughly half of the nearly $20 billion invested in the country was for manufacturing. Increasingly companies from around the world see our southern neighbor as an ideal locale for new manufacturing plants; General Motors GM -0.96%Audi , Honda, Perelli, Alcoa and the Swedish appliance giant Electrolux have all announced major investments.

    Critically this is not so much Ross Perot’s old “sucking sound” of American jobs draining away, but about the shift in the economic balance of power away from China and East Asia. Rather than rivals, the U.S., Mexican and Canadian economies are becoming increasingly integrated, with raw materials, manufacturing goods and services traded across the borders. This integration has proceeded rapidly since NAFTA, with U.S. merchandise exports to Mexico growing from $41.6 billion in 1993 to $216.3 billion in 2012, an increase of 420%,while service exports doubled. MeanwhileU.S. imports from Mexico increased from $39.9 billion in 1993 to $277.7 billion in 2012, an increase of 596%.

    At the same time, U.S. exports to Canada increased from $100.2 billion in 1993 to $291.8 billion in 2012.

    Investment flows mirror this integration. As of 2011, the United States accounted for 44% of all foreign investment in Mexico, more than twice that of second-place Spain; Canada, ranking fourth, accounts for another 10%. Canada, which, according to a recent AT Kearney report, now ranks as the No. 4 destination for foreign direct investment, with the U.S. accounting for more than half the total in the country. Over 70% of Canada’s outbound investment goes to the U.S.

    Our human ties to these neighbors may be even more important. (Disclaimer: my wife is a native of Quebec). Mexico, for example, accounts for nearly 30% of our foreign-born population, by far the largest group. Canada, surprisingly, is the largest source of foreign-born Americans of any country outside Asia or Latin America.

    We also visit each other on a regular basis, with Canada by far the biggest sender of tourists to the U.S., more than the next nine countries combined; Mexico ranks second. The U.S., for its part, accounts for two-thirds of all visitors to Canada and the U.S. remains by far largest source of travelers to Mexico.

    These interactions reflect an intimacy Americans simply do not share with such places as the Middle East (outside Israel), Russia, and China. There’s the little matter of democracy, as well as a common sharing of a continent, with rivers, lakes and mountain ranges that often don’t respect national borders. Policy-maker may prefer to look further afield but North America is our home, Mexico and Canada our natural allies for the future. Adios, Middle East and Europe; bonjour, North America.

    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.

    NAFTA logo by AlexCovarrubias.