New Geography

Author: Joel Kotkin

  • Barack Obama’s New Chicago Politics Abandon Bill Clinton’s Winning Coalition

    While the Democratic convention this week celebrates the party’s new coalition, Bill Clinton will no doubt try to recapture the white middle class that’s largely deserted the Democrats since his presidency ended. But it’s likely his efforts will be a case of too little, too late for Barack Obama—who will have to look elsewhere for his electoral majority.

    The gentrification of the Democratic Party has gone too far to be reversed in this election. After decades of fighting to win over white working- and middle-class families, Democrats under Obama have set them aside in favor of a new top-bottom coalition dominated by urban professionals—notably academics and members of the media—single women, and childless couples, along with ethnic minorities.

    Rather than representing, as Chris Christie and others on the right suggest, the old, corrupt Chicago machine, Obama in fact epitomizes the city’s new political culture, as described by the University of Chicago’s Terry Nichols Clark, that greatly deemphasizes white, largely Catholic working-class voters, the self-employed, and people involved in blue-collar industries.

    The Chicago that Obama represents is more Hyde Park or the Gold Coast than the Daley family base in blue-collar Bridgeport; more faculty club, media shop or Art Institute than the factory culture of “the city of Big Shoulders”.

    The traditional machine provided him with critical backing early in his political career, but Obama owes his success to new groups that have taken center stage in the increasingly liberal post-Clinton Democratic party: the urban “creative class” made up mostly of highly-educated professionals, academics, gays, single people, and childless couples. It’s a group Clark once called “the slimmer family.” Such people were barely acknowledged and even mistreated by the old machine; now they are primary players in the “the post-materialistic” party. The only holdovers from the old coalition are ethnic minorities and government workers.

    As Clark suggests, the new political urban culture differs in both intent and content from the old one. In the past, say under Richard Daley Sr., Chicago was still a family city where schools, churches, and neighborhood associations were key local amenities. Patronage meant jobs for people who also owned homes, both inside and outside the city, and raised and educated their children, often in Catholic schools. The old Daley machine would no more take on the church on contraception than embrace North Korea as its political role model.

    The  Chicago that spawned Obama  has very different priorities. Clark gives perhaps the best definition—“the city as entertainment machine,” where citizens are preoccupied with quality-of-life issues, “treating their own urban location as if tourists, emphasizing aesthetic concerns.”

    This new city, built around the needs of largely childless and often single professionals, focuses primarily on recreation, arts, culture, and restaurants;  the resources valued by the newly liberated urban individual. The economy of such places focuses primarily on those jobs done by these professionals, either in the over-hyped social-media sector, traditional entertainment, or as service providers— waiters, toenail painters, dog-walkers—that cater to the gentry of the urban core.

    In this urban schema, family, long the basic unit of society, becomes peripheral. The new urban political  base—not only in the Windy City but in Boston, New York, Los Angeles, Seattle, Boston and other parts of the core Obama archipelago—is primarily childless, notes demographer Ali Modarres. A majority of residences in Manhattan, for example, are for singles; thus Mayor Bloomberg’s push for 300 square-foot “affordable” micro units that could cost as much as $2,000 a month. Gentrifying Washington, D.C., now boasts the highest concentration of childless adult females in the nation, a mind-boggling 70 percent of all adult women.

    With more than half of all American women now single and more than half of all births to women under 30 now occurring outside of marriage—both historic developments—Obama has targeted “single women” as a core constituency second only to African Americans. Democratic pollster Stanley Greenberg has dubbed them “the largest progressive voting bloc in the country.” Singles, though not the most reliable voting bloc, almost elected John Kerry, and helped put Obama over the top.

    The new urban political culture Nichols described in Chicago has gone national, essentially gentrifying  the Democratic Party and pushing away the predominately white working- and middle-class families whose goals centered around achieving home ownership, basic essentials, and the occasional luxury. These groups have been leaving both the core cities and the Democratic Party for generations. Bill Clinton, former governor of a poor southern state, connected with these voters through his political genius, natural empathy, and his own biography in ways that have proven difficult for President Obama.

    By all accounts, the inroads made among the group by Clinton, and, thanks to the economic crisis, Barack Obama in 2008, have largely dissipated now. Polling data suggests that these groups are now among the strongest backers of that eminent and hard-to-like patrician, Mitt Romney. 

    Recent Gallup polls show Obama’s strongest support, in terms of professions, coming from “professionals,” such as teachers, lawyers, and educators. He does worst among both small businesspeople and those who work in industries such as energy, manufacturing, transportation and construction, where Democrats from Roosevelt to Clinton often won significant support.

    The division between the new political culture and the older one can be seen in a host of issues, most notably policies that favor urban density over suburbs, and strict environmental policies that hurt basic industries. An agenda aimed at ending “sprawl,” cars, and carbon-generating industries appeals generally to the unmarried and childless, who don’t have to worry overmuch about the need for extra space, backyards, or mundane tasks like taking kids to school, or to Target.  

    Ironically, the other key component of the new political culture comes from the other end of the social order: generally poorer, urban-centered minority populations. For all the hype about gentrification of cities, over the past decade the poor accounted for about 80% of population growth in the urban cores of the nation’s 51 largest metropolitan areas. In suburban areas, by contrast, the poor accounted for just 32 percent of population growth.

    Ironically, these poor minorities continue to back the new political culture even though it favors policies, such as expensive “green energy” and tight regulations, that essentially force all but the highest value-added businesses from the urban core, leaving what Mayor Michael Bloomberg famously defined as “the luxury city.” As manufacturers and many service businesses leave either for the suburbs or less expensive regions, the historical working and middle class has also exited, leaving behind a largely entrenched poverty population, a post-materialist upper class, and little in-between.

    Focused on the “upstairs” part of the new political culture, the administration—confident in minority support—has done very little materially to improve the long-term prospects of those “downstairs.” Minorities, in fact, have done far worse under this administration than virtually any in recent history, including that of the hapless George W. Bush. In 2012, African-American unemployment stands at the highest level in decades; 12 percent of the nation’s population, blacks account for 21 percent of the nation’s jobless. The picture is particularly dire Los Angeles and Las Vegas, where black unemployment is nearly 20%, and Detroit, where’s it’s over 25 percent. 

    Latinos, the other major part of the Party’s “downstairs” coalition, have also fared badly under Obama. This is true even among the aspiring working- and middle-class. Overall, the gap in net worth of minority households compared to whites is greater today than in 2005. White households lost 16% in recent years, but African-Americans dropped 53% and Latinos a staggering 66% of their pre-crash wealth. 

    So how does the Democratic Party, in Chicago and elsewhere, maintain its support among these groups? Needlessly exclusionary Republican policies play a role, scaring off potential minority voters, particularly immigrants and their offspring. Obama also has used his own biography to appeal personally to these groups, most understandably African-Americans, as a way to divert them from his economic shortcomings. And well-timed election-year conversions on key social issues like gay marriage and amnesty for young undocumented immigrants have helped him outmaneuver the hopelessly clueless GOP.

    The fact that there are few decent middle-income jobs—in fact the jobs that have appeared during the recovery have been vastly worse than those lost during the meltdown—for the newly legalized or anyone else seems, at the moment at least, somewhat besides the point.

    Indeed  “besides the point” may be the real Democratic slogan for this year. The Democrats in Charlotte need to argue that results—fewer jobs and far fewer middle-income jobs—matter less than the blessings of green politics, urbanism, and racial-identity politics. In today’s  Democratic party, having  the “correct”  sentiments often seem to outweigh even the fundamentals of broad-based economic success.

    One can only wonder what Harry Truman would think of Obama’s approach, or perhaps even Bill Clinton in his private moments.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in The Daily Beast.

    Bill Clinton photo by Bigstock.

  • The Unseen Class War That Could Decide The Presidential Election

    Much is said about class warfare in contemporary America, and there’s justifiable anger at the impoverishment of much of the middle and working classes. The Pew Research Center recently dubbed the 2000s a “lost decade” for middle-income earners — some 85% of Americans in that category feel it’s now more difficult to maintain their standard of living than at the beginning of the millennium, according to a Pew survey.

    Blaming a disliked minority — rich business folks — has morphed into a predictable strategy for President Obama’s Democrats, stripped of incumbent success. But all the talk of “one percent” versus “the ninety nine percent” misses new splits developing within both the upper and middle classes.

    There is no true solidarity among the rich since no one is yet threatening their status. The “one percent” are splitting their bets. In 2008 President Obama received more Wall Street money than any candidate in history, and he still relies on Wall Street bundlers for his sustenance. For all his class rhetoric, miscreant Wall Streeters, particularly big ones, have evaded big sanctions and the ignominy of jail time.

    Obama enjoys great support from the financial interests that benefit from government debt and expansive public largesse. Well-connected people like Obama’s financial tsar on the GM bailout, Steven Rattner, who is also known as a vigorous defender of “too big to fail.”

    The “patrician left” — a term that might have amused Marx — extends as well to Silicon Valley, where venture capitalists and techies have opened their wallets wider than ever before for the president. Microsoft and Google are two of Obama’s top three organizational sources of campaign contributions. Valley financiers are not always as selfless as they or their admirers imagine: Many have sought to feed at the Energy Department’s bounteous “green” energy trough and all face regulatory reviews by federal agencies.

    The Republicans have turned increasingly to those patricians who depend on the more tangible economy. If you make your living from digging coal or exploring for oil wells, even if you don’t like him, Romney is you man. This saddles the GOP with the burden of being linked to one of America’s most hated interests: oil and gas companies. Almost as detested is the biggest source of Romney cash, large Wall Street banks. (In contrast, Democratic-leaning industries, such as Internet-related companies, enjoy relatively high public support.)

    With the patriarchate divided, the real action in the emerging class war is taking place further down the economic food chain. This inconvenient reality is largely ignored by the left, which finds the idea of anyone this side of Bain Capital supporting Romney as little more than “false consciousness.”

    Obama’s core middle-class support, and that of his party, comes from what might be best described as “the clerisy,” a 21st century version of France’s pre-revolution First Estate. This includes an ever-expanding class of minders — lawyers, teachers, university professors, the media and, most particularly, the relatively well paid legions of public sector workers — who inhabit Washington, academia, large non-profits and government centers across the country.

    This largely well-heeled “middle class” still adores the president, and party theoreticians see it as the Democratic Party’s new base. Gallup surveys reveal Obama does best among “professionals” such as teachers, lawyers and educators. After retirees, educators and lawyers are the two biggest sources of campaign contributions for Obama by occupation. Obama’s largest source of funds among individual organizations is the University of California, Harvard is fifth and its wannabe cousin Stanford ranks ninth.

    Like teachers, much of academia and the legal bar like expanding government since the tax spigot flows in the right direction: that is, into their mouths. Like the old clerical classes, who relied on tithes and the collection bowl, many in today’s clerisy lives somewhat high on the hog; nearly one in five federal workers earn over $100,000.

    Essentially, the clerisy has become a new, mass privileged class who live a safer, more secure life compared to those trapped in the harsher, less cosseted private economy. As California Polytechnic economist Michael Marlow points out, public sector workers enjoy greater job stability, and salary and benefits as much as 21% higher than of private sector employees doing similar work.

    On this year’s Labor Day, this is the new face of unionism. The percentage of private-sector workers in unions has dropped from 24% in 1973 to barely 7% today and in 2010, for the first time, the public sector accounted for an absolute majority of union members. “Labor” increasingly means not guys with overalls and lunch pails, but people whose paychecks are signed by taxpayers.

    The GOP, for its part, now relies on another part of the middle class, what I would call the yeomanry. In many ways they represent the contemporary version of Jeffersonian farmers or the beneficiaries of President Lincoln’s Homestead Act. They are primarily small property owners who lack the girth and connections of the clerisy but resist joining the government-dependent poor. Particularly critical are small business owners, who Gallup identifies as “the least approving” of Obama among all the major occupation groups. Barely one in three likes the present administration.

    The yeomanry diverge from the clerisy in other ways. They tend to live in the suburbs, a geography much detested by many leaders of the clerisy and, likely, the president himself. Yeomen families tend to be concentrated in those parts of the country that have more children and are more apt to seek solutions to social problems through private efforts. Philanthropy, church work and voluntarism — what you might call, appropriately enough, the Utah approach, after the state that leads in philanthropy.

    The nature of their work also differentiates the clerisy from the yeomanry. The clerisy labors largely in offices and has no contact with actual production. Many yeomen, particularly in business services, depend on industry for their livelihoods either directly or indirectly. The clerisy’s stultifying, and often job-toxic regulations and “green” agenda may be one reason why people engaged in farming, fishing, forestry, transportation, manufacturing and construction overwhelmingly disapprove of the president’s policies, according to Gallup.

    Obama supporters sometimes trace the loss of largely white working-class support — even to the somewhat less than simpatico patrician Romney — to “false consciousness.”  A recent Daily Kos article, charmingly entitled “The Masses are Asses,” chose to wave the old bloody shirt of racism, arguing that whites “are the single largest, and most protected racial group in this country’s history.”

    Ultimately this division — clerisy and their clients versus yeomanry — will decide the election. The patricians and the unions will finance this battle on both sides, spreading a predictable thread of half-truths and outright lies. The Democrats enjoy a tactical advantage. All President Obama needs is to gain a rough split among the vast group making around or above the national median income. He can count on overwhelming backing by the largely government dependent poor as well as most ethnic minorities, even the most entrepreneurial and successful.

    Romney’s imperative will be to rouse the yeomanry by suggesting the clerisy, both by their sheer costliness and increasingly intrusive agenda, are crippling their family’s prospects for a better life. In these times of weak economic growth and growing income disparity, the Republicans delude themselves by claiming to ignore class warfare. They need to learn how instead to make it politically profitable for themselves.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in Forbes.

    Mitt Romney image from Bigstock.

  • Utah Up, Chicago Down: Why Mitt Romney Should Embrace His Mormonism

    In his run for the Republican nomination, Mitt Romney downplayed his Mormonism—referring only to “faith” or “shared values”—in the face of small-minded members of the Christian right and the occasional cackle from the Eastern cultural avant-garde. But with his party’s nod in hand, Romney has been “coming out” in the run-up to the Republican convention, letting pool reporters join him and his family at a church service, and even choosing a member of the church to deliver the invocation on the night he addresses the Republican convention.

    The church’s appeal can be seen, in part, in the contrast between booming Utah and Salt Lake City and President Obama’s adopted home state of Illinois and hometown of Chicago.

    Utah netted 150,000 new arrivals from other states in the last decade, while Illinois lost a net of 70,000 people each year to other states. And Utah’s new arrivals include more than Mormons returning to Zion; Salt Lake County is now only 54% Mormon. Twenty-six percent of the county’s residents are minorities, mostly Hispanic immigrants.

    Romney himself reflects the enormous changes in the fast-growing and highly successful Church of Jesus Christ of Latter-day Saints (LDS), the official name of the religion, since the church (which continues to have an all-male clergy), opened itself to black members in 1978. Mormons now enjoy levels of education and wealth well above those of the average American.  Some 53.5% of LDS males have a post–high-school education, compared to 36.5% of the total U.S. population. And 44.3% of LDS females have a post-high-school education, compared to a national average of 27.7%. More impressive still, unlike mainstream churches, Mormonism is thriving; the church membership in North America grew 45 percent over the past decade to more than 6 million members—roughly matching the number of American Jews. 

    This is not Romney’s father’s—and certainly not his grandfather’s—LDS.

    A recent Gallup survey ranked Utah first in terms of quality of life, in part because of its citizens’ “low smoking habits, ease of finding clean and safe water, having supervisors who treat workers like a partner rather than a boss, learning something new or interesting on any given day, and perceptions that your city or area are ‘getting better’ rather than ‘getting worse.’”

    While Illinois competes with California for the nation’s worst credit ranking, Utah stands at the AAA apex. The job-growth rate in Salt Lake City and the state rank near the top while Chicago and Illinois have sunk relentlessly toward the bottom. Forbes recently ranked Utah “the best state for business and careers” for the second straight year; Illinois ranked 41st.

    While Utah undoubtably owes some of its success to its low-tax, low-regulation culture, and to smart incentives to draw in businesses, it’s also benefitted from a Mormon culture that promotes not supply-side but investment-driven growth.

    From its origins in the great Mormon migration in the late 1840s, the state and the church have built a legacy of careful planning. Brigham Young was many things, control freak and city planner among them, laying out the streets of the towns with exacting detail. The Mormons, wrote Wallace Stegner, a “gentile” who lived among them, “were the most systematic, organized, disciplined, and successful pioneers in our history.”

    Today this legacy is evident in the excellent infrastructure the state is building, including new highways that shame the pot-holed roads that people on the coasts commonly endure. Utahans have invested mightily in their universities, public and private, and are positioning themselves to be major players in fields from energy and agriculture to composite manufacturing, science, and engineering. They are not merely waiting around to ransack the intellectual capital of other states; for the last two years the University of Utah has ranked No. 1 in forging startups, besting institutions like MIT and Columbia.

    It is a bit distressing for a Californian to ride down Highway 15 south from Salt Lake City towards Provo and see buildings, often just finished, from some of Silicon Valley’s signature companies including Intel, Adobe, Twitter, eBay, and Fairchild Semiconductor. These are jobs that used to stay in California, but for a host of reasons—regulation and housing prices chief among them—have moved east to Utah.

    And most of the former Californians I’ve met in Salt Lake like the place, even if they sometimes feel uncomfortable with the Mormon aversion to such habit as drinking. Over the past 30 years, the city has changed for the better. Good food now proliferates—even if the elegantly dressed young Mormons still don’t order wine, much less vodka. The local arts and culture scene has evolved to, if not world-class levels, at least those seen in other similarly-sized cities.

    But what’s most impressive about Utahans may be their devotion to family. Although they make much noise about their dedication to “working families,” the Democratic Party increasingly relies on singles and the childless as its core base, particularly among white voters. In contrast, GOP-dominated Utah (which is largely white, but increasingly diverse) has the highest birth rate and youngest population in the nation. Families thrive there, including those who are not Mormon. It is almost like another America—one where most people raise their children, and push education and enterprise. If you’re getting deep into your 50s like me, you might remember that country.

    True, Salt Lake City now has some high-rise residential areas and some local planners, largely from the University of Utah, who push “smart growth.” But the big growth along the Highway 15 corridor is mostly single-family home communities, affordable and large enough to accommodate several offspring. They seem a lot like the places Long Island and the San Fernando Valley once were.

    Like the church around which it is built, the Mormon Zion in Salt Lake Valley has also changed. It has what may be the largest concentration of multilingual people in the country. With 55,000 missionaries at 340 mission sites across the globe, native English-speaking Mormons have learned more than 50 languages. Former Utah governor and Romney rival Jon Huntsman gained respectability—even among sophistos—for his fluent Mandarin.

    On the business side, Mormons’ linguistic skills have attracted loads of big international companies, such as Goldman Sachs, who need people capable of conversing in Lithuanian, Chinese, or Tongese. Goldman has 1,400 employees in Salt Lake City, making it the investment bank’s sixth largest location in the world.

    In contrast to the antediluvian nonsense sometimes expressed by right-wing evangelical Christians, the LDSers have become more cosmopolitan as their faith has expanded. Once a peculiarly American creed, with the vast majority of its faithful living in the Western United States, Mormonism has morphed into a global religion with over 11 million members—more than half of them outside the United States. Once narrowly white, the church’s biggest growth now is in Brazil, the Philippines, and the Pacific Islands. Even in the U.S., converts have made for an increasingly diverse church, with blacks and Hispanics accounting for one in five new Mormons, according to Pew.

    It’s not likely that the church will be portrayed by the Obama campaign and its associated media outlets in this way. They also are sure to continue portraying millionaire Mitt as the greedy capitalist devil incarnate. Perhaps to avoid getting drawn into a discussion of his faith, Romney rarely mentions that he tithes 10 percent of his substantial income to support church activities. Such tithing, expected of all church members, helps explain why Utahans are easily the nation’s most charitable citizens, according to The Chronicle of Philanthropy—contributing two and a half times more of their income than Illinoisans.

    Yet most appealing about Mormons is their focus on self-help and community outreach, and the church’s highly structured and efficient relief organization—something Romney has never communicated well. Mormons are remarkable for their ability to rise to the occasion during natural disasters like Hurricane Katrina and the earthquake in Haiti.

    “Mitt may not be Bill Clinton or Barack Obama—he’s a boring guy, but he’s not the jerk people think he is,” says Joe Cannon, the former publisher of the Deseret News, the church-owned paper. “When you are a bishop,” as Romney was in Boston, says Cannon, “you are running a huge welfare state on your own. You spend a lot of time helping the poorest and most dysfunctional congregants.”

    In the end, Utah’s Mormon-created reality is bigger than one relentlessly ambitious man’s foibles and tax dodges; Mormonism is the enterprise that transformed a desert province into a productive garden. That’s the story that Romney needs to share between now and November. If he fails, we might see a more appealing Mormon, Jon Hunstman, remind us of this success story in 2016.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in The Daily Beast..

    Mitt Romney photo by BigStockPhoto.com.

  • America’s Baby Bust: How The Great Recession Has Jeopardized Our Demographic Health

    At the turn of the century, America’s biggest advantage was its relatively vibrant demographics. In sharp contrast with its major competitors — the E.U., Russia, China, Japan — the United States had maintained a far higher birthrate and rate of population growth.

    But the 2010 Census showed that in the past decade America’s birthrate slipped below at least one European country (France) and under the pace necessary to replace our current population. Immigration, both legal and illegal, is also slowing, in part due to plunging birthrates in Mexico and other Latin American countries. As one National Geographic report from Brazil has it, women there, too, are saying: “A fábrica está fechada.” The factory is closed.

    America’s sinking birthrate is in great part a function of our wobbly economy. The decline, notes the Pew Research Center, largely coincides with the onset of the 2007 real estate crash and the financial crisis the following year.

    The recession had a disproportionate impact on people of child-bearing age, who suffered higher unemployment and steeper income declines than their elders. In the process, the U.S. fertility rate dropped from over 2.1 births per woman in 2007 to 1.9 last year, below replacement rate for the first time since the mid-1980s. The 2010 Census found that the number of households that have children under age 18 was 38 million, unchanged from 2000, despite a 9.7% growth in the U.S. population over that period.

    Of course many environmentalists would celebrate these numbers, and some nativists as well. But the problem is not that we need more people per se — we need an increase in younger, working-age people to make up for our soon to be soaring population of retirees. Young people are the raw capital of the information age and innovation, and new families are its ballast and growth market.

    Yet many developed countries are facing dramatic labor force deficits. By 2050, according to Census projections, there will be 40% fewer workers in Japan then there were in 2000, 25% less in Europe and 10% fewer in China; only projections of higher birthrates and immigration allowed demographers to suggest the U.S. workforce would keep growing.

    Without these future workers our already tottering pension system will become even more untenable, as is occurring in Europe and Japan. The bad part about slow population growth is that it depresses the economy, which in turn works against family formation.

    Of course, there are others ways to deal with this imbalance of too many retirees and too few workers. One is to raise taxes. The billionaire philanthropist Pete Peterson estimates that most developed countries will need to increase their spending on old age benefit promises from 9% to 16% of GDP over the next 30 years. This would require an increase in taxes of 25% to 40% — even in the already high-tax countries of northern Europe.

    Raising taxes to transfer funds to the older generation is already happening in some of the most rapidly aging countries. Japanese lawmakers just voted to double the country’s sales tax by 2015 precisely for this reason. Due in large part to low birthrates and soaring numbers of seniors, Japan is now the most heavily indebted high-income country in the world.

    Germany likewise is now considering a special tax on younger workers to fund the pensions of the growing ranks of oldsters. Chancellor Angela Merkel has proposed the 1% income tax as a “demographic reserve” for a workforce that is expected to shrink by 7 million by 2023. “We have to consider the time after 2030, when the baby boomers of the ‘50s and ‘60s are retired and costing us more in health and care costs,” explained Gunter Krings, who drafted the new proposal for Germany’s ruling Christian Democrats.

    Higher taxes, or its evil twin, austerity, are unlikely to solve this dilemma. Other issues may constrain family growth — high urban population densities, women’s growing role in the workforce, declining religiosity — but one critical precondition for spurring family growth is to expand the economy. Without growth, the long-term decline of most high-income countries, including the United States, is all but assured.

    This turns on its head the commonplace assumption that societies reduced their birthrates as they got wealthier. This pattern was seen in the United States and Europe by the 1960s and, even more so in East Asia, whether governments adopted baby-suppressing (notably China) methods or, more recently, as in Singapore, have tried to promote family formation.

    But more recently it appears that declining economics — and strong public perceptions that things will get worse — can also convince people not to have children. In 2010, according to Gallup, most European countries have been expecting harder times; pessimism was particularly strong in Spain, Italy, Greece, the Czech Republic and the United Kingdom. Stories about divorced Spanish or Italian young fathers sleeping on the streets or in their cars is not exactly a strong advertising for parenthood.

    In 2011, birthrates fell in 11 of the 15 European countries that have reported numbers. Among the countries reporting declines were Finland and Denmark, where rates had been ticking slightly upwards.

    The impact has been even greater in countries like Spain and Greece, where overall joblessness has hit one in four and youth unemployment is roughly 50%. Some of these countries face the prospect of considerable de-population in the coming decades.

    “A more pessimistic economic outlook” is one key reason that European birth rates have been depressed and family formation so slow, confirms Austrian demographer Wolfgang Lutz. Overall fertility has fallen to roughly 1.5, well below replacement rate and all but guaranteeing a demographic-based economic crisis a decade or two sooner. Some eastern countries like Latvia now have fertility rates approaching 1.2. Lutz believes that once birthrates fall to these levels, there is no turning back.

    Yet it is Japan that perhaps shows this renewed relationship between economics and birthrates most clearly. In 1991 many economists predicted that Japan would overtake the U.S. economy; instead U.S. GDP grew much faster and China supplanted Japan in 2010 as the world’s second-largest economy. As prices deflated and opportunities shriveled, Japanese grew less interested in either starting or growing families.

    It could get even worse: Japanese teens seem not only less interested in work but in each other. In what seems an enormous reversal of adolescent nature, 36% of Japanese males 16 to 19 years old have admitted to pollsters having no interest in sex, and some even despise it. The figure is even higher (59%) for females in the same age category. For many, notes Japanese sociologist Mika Toyota, hobbies, vacations, food and computer games are often more alluring than pursuing the opposite — or the same — sex.

    It may well be that American birthrates have been more impacted than Europe’s by the recent recession due to the relative weakness of the country’s social safety net. Finnish demographer Anna Rotkirch has pointed out that Europeans have tried to mitigate the impact of recession through generous transfer payments to young families. This may account as well for the fact that France’s birthrate last year surpassed that of the United States.

    But without strong economic growth, it seems likely that family formation and birthrates will continue downward everywhere, particularly as economic realities force reductions in state aid. A mindlessly ever-expanding welfare state, trying to enlist more clients, even tiny ones, will diminish private sector growth and usher in even more quickly the onset of “demographic winter.” A lethal demographic cocktail of high taxes, low growth and fewer babies could set the stage for an even greater financial crisis in the decades ahead.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in Forbes.

    Childhood kids photo by BigStockPhoto.com.

  • The Screwed Election: Wall Street Can’t Lose, and America Can’t Win

    About two in three Americans do not think what’s good for Wall Street is good for America, according to the 2012 Harris poll, but do think people who work there are less “honest and moral than other people,” and don’t “deserve to make the kind of money they earn.” Confidence in banks is at a record low, according to Gallup, as they’ve suffered the steepest fall in esteem of any American institution over the past decade. And people have put their money where their mouth is, with $171 billion leaving the stock market last year alone, and 80 percent of Wall Street communications executives conceded that public perception of their firms was not good.

    Americans are angry at the big-time bankers and brokers, and yet, far from a populist attack on crony capitalism, Wall Street is sitting pretty, looking ahead to a presidential election that it can’t possibly lose. They have bankrolled a nifty choice between President Obama, the largest beneficiary of financial-industry backing in history and Mitt Romney, one of their very own.

    One is to the manner born, the other a crafty servant; neither will take on the power.

    Think of this: despite taking office in the midst of a massive financial meltdown, Obama’s administration has not prosecuted a single heavy-hitter among those responsible for the financial crisis. To the contrary, he’s staffed his team with big bankers and their allies. Under the Bush-Obama bailouts the big financial institutions have feasted like pigs at the trough, with the six largest banks borrowing almost a half trillion dollars from uncle Ben Bernanke’s printing press. In 2013 the top four banks controlled more than 40 percent of the credit markets in the top 10 states—up by 10 percentage points from 2009 and roughly twice their share in 2000. Meantime, small banks, usually the ones serving Main Street businesses, have taken the hit along with the rest of us with more than 300 folding since the passage of Dodd-Frank, the industry-approved bill to “reform” the industry.

    Yet past the occasional election-year bout of symbolic class warfare, the oligarchs have little to fear from an Obama victory.

    “Too big to fail,” enshrined in the Dodd-Frank bill, enjoys the full and enthusiastic support of the administration. Obama’s financial tsar on the GM bailout, Steven Rattner, took to The New York Times to stress that Obamians see nothing systemically wrong with the banking system we have now, blaming the 2008 market meltdown on “old-fashioned poor management.”

    “In a world of behemoth banks,” he explained to we mere mortals, “it is wrong to think we can shrink ours to a size that eliminates the ‘too big to fail’ problem without emasculating one of our most successful industries.”

    But consider the messenger. Rattner, while denying wrongdoing, paid $6.2 million and accepted a two-year ban on associating with any investment adviser or broker-dealer to settle with the SEC over the agency’s claims that he had played a role in a pay-to-play scheme involving a $50,000 contribution to the now-jailed politician who controlled New York State’s $125 billion pension fund. He’s also expressed unlimited admiration for the Chinese economic system, the largest expression of crony capitalism in history. Expect Rattner to be on hand in September, when Democrats gather in Charlotte, the nation’s second-largest banking city, inside the Bank of America Stadium to formally nominate Obama for a second term.

    In a sane world, one would expect Republicans to run against this consolidation of power, that has taxpayers propping up banks that invest vast amounts in backing the campaigns of the lawmakers who levy those taxes. The party would appeal to grassroots capitalists, investors, small banks and their customers who feel excluded from the Washington-sanctioned insiders’ game. The popular appeal is there. The Tea Party, of course, began as a response against TARP.

    Instead, the party nominated a Wall Street patrician, Mitt Romney, whose idea of populism seems to be donning a well-pressed pair of jeans and a work shirt.

    Romney himself is so clueless as to be touting his strong fund-raising with big finance. His top contributors list reads something like a rogue’s gallery from the 2008 crash: Goldman Sachs, JPMorgan Chase, Morgan Stanley, Credit Suisse, Citicorp, and Barclays. If Obama’s Hollywood friends wanted to find a perfect candidate to play the role of out-of-touch-Wall Street grandee, they could do worse than casting Mitt.

    With Romney to work with, David Axelrod’s dog could design the ads right now.

    True, some of the finance titans who thought Obama nifty back in 2008 have had their delicate psyches ruffled by the president’s election-year attacks on the “one percent.” But the “progressives,” now tethered to Obama’s chain, are deluding themselves if they think the president’s neo-populist rancor means much of anything. They get to serve as what the Old Bosheviks would have called  “useful idiots,” pawns in the fight between one group of oligopolists and another.

    This division can be seen in the financial community as well. For the most part Obama has maintained the loyalty of those financiers, like Rattner, who seek out pension funds to finance their business. Those who underwrite and speculate on public debt have reason to embrace Washington’s free spenders. They are also cozy to financiers like John Corzine, the former Goldman Sachs CEO and governor of New Jersey, whose now-disgraced investment company MF Global is represented by Attorney General Eric Holder’s old firm. 

    The big-government wing of the financial elite remains firmly in Obama’s corner, as his bundlers (including Corzine) have already collected close to $20 million from financial interests for the president. Record support has also poured in from Silicon Valley, which has become ever more like a hip Wall Street west. Like its east-coast brethren, Silicon Valley has also increased its dependence on government policy, as well-connected venture capitalists and many in the tech community  have sought to enrich themselves on the administration’s “green” energy schemes.

    Romney, on the other hand, has done very well with capital tied to the energy industry, and others who invest in the broad private sector, where government interventions are more often a complication than a means to a fast buck. His broad base of financial support reflects how relatively few businesses have benefited from the current regime.

    Who loses in this battle of the oligarchs? Everyone who depends on the markets to accurately give information, and to provide fundamental services, like fairly priced credit.

    And who wins? The politically well-situated, who can profit from credit and regulatory policies whether those are implemented by  Republicans or Democrats.

    American democracy and the prosperity needed to sustain it are both diminished when Wall Street, the great engineer of the 2008 crash, is all but assured of victory in November.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in The Daily Beast.

    Wall Street bull photo by Bigstockphoto.com.

  • The U.S. Cities Getting Smarter The Fastest

    It’s a commonplace among pundits and economic developers that smart people flock to “smart” places like sparrows to Capistrano. Reflecting the conventional wisdom, The New York Times recently opined that “college graduates gravitate to places with many other college graduates and the atmosphere that creates.”

    Yet an analysis of Census data shared with Forbes by demographer Wendell Cox tells a different story. In the past decade, the metropolitan areas that have enjoyed the fastest growth in their college-educated populations have not been the places known as hip, intellectual hotbeds.

    Perhaps the myth most devastated by the study, which looked at the change in the number of people with bachelor’s degrees in the 51 largest metropolitan statistical areas from 2000-2010, is that there is, as the Atlantic’s Derek Thompson has insisted, a “bipolar population shift” in which the educated go to the expensive blue regions while families and dummies (often conflated as the same thing) flock to the brain-dead reaches of the Sunbelt. In fact, during the first decade of the 21st century, the number of college graduates in Las Vegas increased by a remarkable 78%, the biggest jump in the nation over the period, while in second place Riverside-San Bernardino, Calif., the college-educated population expanded by 60%. Other surprise cities in the top 10 — Charlotte, N.C. , (No. 5) ; San Antonio (No. 6); Jacksonville, Fla. (No. 7); Orlando (eighth); and Nashville, Tenn. (ninth) — all saw 40% to 50% increases in their college-educated population.

    Among the more conventional “brain” cities, the biggest winners from 2000 to 2010 tended to be lower-cost metropolitan areas with less dense cores, such as Raleigh–Durham, N.C. (No. 3), and Austin, Texas (No. 4). In contrast, the more expensive places celebrated for being smart expanded their populations of college grads at roughly half that rate, such as San Francisco (48th), San Jose (43rd), Boston (45th) and New York (39th).

    This is not to say that these cities don’t boast huge concentrations of educated people. The largest metro areas, led by New York, Los Angeles and Chicago, have the biggest populations with bachelor’s degrees. And on a per capita basis, Washington D.C. (aka “parasite city”), San Francisco, Boston, Denver and Minneapolis lead the way, with a share of college grads 20% or more above the national average.

    But other metro areas are catching up. In Tampa-St. Petersburg, Fla., for example, the share of the population that’s college-educated grew from 21.7%  to 26.2%, a gain of 21%. This is roughly twice the increase in the Washington, San Francisco and Seattle metropolitan areas.

    This trend  doesn’t extend to all lower-cost regions. The Sunbelt has generally gained, but some Rust Belt towns have not fared as well. Cleveland, for example, ranked 50th in terms of its growth of its college-educated population, Detroit 49th and Buffalo 48th. Low costs, not surprisingly,  don’t compensate for poor economic conditions, decayed infrastructure and bad weater.

    Yet the pattern is clear: brainpower is spreading out. The notion that companies seeking skilled labor have to go to one of the “hip” cities — an idea relentlessly marketed by the New York and D.C.-based press — appears greatly overstated. In reality, skilled, college-educated people are increasingly now scattered throughout the country, and often not where you’d expect them. For example, Charlotte, N.C., Columbus, Ohio, Kansas City and Atlanta now boast about the same per capita number of college grads as Portland and Chicago, and have higher per capita concentrations of grads over the age of 25 than Los Angeles.

    These trends also suggest that, in many ways, the highly educated are not so different from Americans who never went to college or never graduated. The factors that have driven economic outperformance by some cities over the past decade — lower home prices, better business climate, job opportunities — also attract people with bachelor’s degrees.

    Atlanta, Houston and Dallas each have added 300,000 college grads in the past decade. This is far more than Boston’s increase of 240,000 or San Francisco’s 211,000. Once considered backwaters, these Sunbelt cities now all enjoy a critical mass of educated people.

    Houston boasts a percentage of college grads over 25 somewhat above the national average. Dallas-Fort Worth is just about at the national average. The total Houston increase in college grads over the past decade amounts to three times that of the capital of Silicon Valley, San Jose, Calif., twice that of San Diego and more than Philadelphia. Since hipness is not a well-known Houston trait (though it did place first this year on Forbes’ list of America’s Coolest Cities), and climate can hardly be seen as a positive, one has to imagine this growth has something to do with a job machine that has created over 100,000 new positions between 2006 and 2011.

    The addition of college grads leads to changes on the ground that tend to make cities even more attractive to future graduates. In the case of Houston, there’s been a proliferation of more sophisticated restaurants, clubs and bars in growing inner-city districts like Houston Heights, Montrose and Midtown.

    In the past, executives often turned up their noses at the prospect of relocating to the Gulf Coast metropolis, says Chris Schoettelkotte, founder of the Houston-based recruiting firm Manhattan Resources. Now, particularly given the weak national economy, Houston is increasingly competitive in the race to recruit skilled, educated labor, he says. This is particularly true with people at the beginning of their career. “I don’t get the pushback I used to get,” Schoettelkotte says. The message to recruits: “ You try to find a city with a better economy and better job prospects than us.”

    A democratization and dispersion of educated workers bodes well for the U.S. economy. When highly skilled labor is concentrated in a few places, such as Boston or the Bay Area, opportunities for growth tend to be limited by extremely high business and housing costs. Having more places with educated workers gives employers and entrepreneurs more options for where to start a business or relocate.

    Looking ahead, we can expect this trend to continue, particularly as the current bulge of millennial graduates mature and start to look for affordable places to live and work. Regions that maintain strong job growth, and keep their housing costs down, are likely to keep gaining on those metropolitan areas celebrated for being the winners of the race for educated people.

    Metropolitan Growth in Age 25+ Population with Bachelor Degrees
    Rank Region Total Growth Percent Growth
    1 Las Vegas 122,304 78.4%
    2 Riverside 187,406 60.0%
    3 Raleigh 107,075 55.2%
    4 Austin 147,341 52.3%
    5 Charlotte 126,226 51.7%
    6 San Antonio 111,739 48.1%
    7 Jacksonville 77,102 46.8%
    8 Orlando 125,299 46.6%
    9 Nashville 92,823 42.4%
    10 Phoenix 216,585 42.1%
    11 Tampa 145,675 39.6%
    12 Houston 300,952 39.5%
    13 Louisville 61,312 37.6%
    14 Portland 134,935 37.2%
    15 Dallas 336,993 36.9%
    16 Atlanta 308,306 36.1%
    17 Sacramento 108,151 35.8%
    18 Denver 169,553 35.2%
    19 Indianapolis 90,001 34.5%
    20 Oklahoma City 56,117 33.5%
    21 Richmond 67,012 33.4%
    22 Columbus 96,905 33.2%
    23 Miami 262,394 31.7%
    24 Virginia Beach 73,110 31.2%
    25 Seattle 205,977 31.2%
    26 Kansas City 103,527 31.0%
    27 Salt Lake City 46,205 30.5%
    28 Washington 410,679 30.5%
    29 Minneapolis 189,209 29.9%
    30 Baltimore 146,285 29.6%
    31 San Diego 154,845 29.6%
    32 St. Louis 128,617 29.5%
    United States 13,115,437 29.5%
    33 Cincinnati 90,374 28.3%
    34 Los Angeles 559,904 27.7%
    35 Memphis 45,141 27.4%
    36 Philadelphia 281,686 27.2%
    37 Birmingham 41,436 26.3%
    38 Chicago 429,001 25.5%
    39 New York 905,618 24.4%
    40 Milwaukee 63,508 24.3%
    41 Providence 59,926 24.1%
    42 Rochester 44,268 23.6%
    43 San Jose 102,609 22.5%
    44 Pittsburgh 88,370 22.3%
    45 Boston 240,426 22.0%
    46 Hartford 49,225 20.8%
    47 Buffalo 36,578 20.1%
    48 San Francisco 211,835 19.2%
    49 Detroit 109,429 16.2%
    50 Cleveland 51,259 14.9%
    51 New Orleans 19,307 10.1%

    Data source: U.S. Decennial Census 2000 and 2010.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in Forbes.

    Graduation image by BigStockPhoto.com.

  • Let L.A. Be L.A.

    Victor’s Restaurant, a nondescript coffee shop on a Hollywood side street, seems an odd place to meet for a movement challenging many of Los Angeles’s most powerful, well-heeled forces. Yet amid the uniformed service workers, budding actors, and retirees enjoying coffee and French toast, unlikely revolutionaries plot the next major battle over the city’s future. Driving their rebellion is a proposal from the L.A. planning department that would allow greater density in the heart of Hollywood, a scruffy district that includes swaths of classic California bungalows and charming 1930s-era garden apartments. The proposal—which calls for residential towers of 50 stories or more along Hollywood Boulevard, where no building currently tops 20 stories—has been approved unanimously by the city council and will now probably be challenged in court.

    That proposal isn’t the only densification plan making its way through city hall. Another is a “wholesale revision” of L.A.’s planning code that would strip single-family districts of their present status and approve the construction of rental units in backyards and of high-density housing close to what are now quiet residential neighborhoods. “We are going to remake what the city looks like,” Mayor Antonio Villaraigosa told the New York Times in March. Richard Abrams, a 40-year Hollywood resident and a leader of SaveHollywood.Org, puts it differently: “They want to turn this into something like East Germany. This is all part of an attempt to worsen the quality of life—to leave us without backyards and with monumental traffic.” The rebels gathered at Victor’s note that many of the density scheme’s most tenacious advocates, such as councilman and mayoral aspirant Eric Garcetti, live in leafy residential areas removed from the traffic nightmare that the new development would bring.

    Despite public outcry, Los Angeles’s political, labor, and real-estate elites almost unanimously support what Villaraigosa calls “elegant density,” pushing for the transformation of the city’s low-rise, multipolar, and moderate urban form into something more like vertical, transit-oriented New York. Dissenters from this view are often called “antiurban.” But to activists like Susan Swan, who leads the Hollywood Neighborhood Council, it’s really about letting L.A. remain L.A. As she notes, New York and Los Angeles have evolved in radically different ways. New York, particularly its urban core, was built largely before the automobile age. Manhattan and the surrounding boroughs are transit-dependent: 56 percent of commuters take public transportation. By contrast, L.A. remains overwhelmingly car-oriented, with only 11 percent of commuters using public transit, despite the $8 billion invested in rail lines over the past two decades. Los Angeles’s downtown is nowhere near as important as New York’s; just over 2 percent of L.A. metropolitan-area employment is downtown, compared with about 20 percent in greater New York. Instead of revolving around one mega-center, L.A. boasts commercial centers in each of its major neighborhoods, many of which are close to single-family homes and low-rise apartments.

    This dispersion creates an aesthetic rarely appreciated by density boosters, enabling residents to enjoy fully L.A.’s unique ambience—its superb Mediterranean climate, lush foliage, tall trees, and, most of all, magnificent light. Even when you walk down Hollywood Boulevard, what’s most striking is not the skyline but the steep hills, framed by palms, rising toward a clear blue sky. For a glimpse of the Hollywood imagined by Villaraigosa and his confederates, take a look at the much-reviled Hollywood and Highland Center, home of the Dolby Theatre, which hosts the Academy Awards. Instead of brilliant light and blue sky, visitors confront a boxy hulk that obscures the hillside views.

    Swan and other activists deny that opposing mass densification is synonymous with opposing development. With many nearly abandoned blocks and downscale businesses around its core, Hollywood certainly could use a face-lift. But local community activists want development to be congruent with the area’s architectural traditions. “There is real dismay in our community that the opportunity to make Hollywood a world-class destination is slipping away to these ‘Manhattanization’ fantasies,” says Swan, a retired bookbinder. “We have always said that we love Manhattan—in New York.”

    Demographics also make a mockery of the densification argument. With the exception of downtown, most of the central parts of Los Angeles have either stagnated or lost population over the last 20 years. Hollywood, for example, shrank from 213,000 residents in 1990 to 198,000 today. Within the last decade, Los Angeles County’s growth slowed to barely 3 percent—roughly one-fifth the rate that it enjoyed during the go-go 1980s, a period of extraordinary prosperity in the region. Yet Garcetti, Villaraigosa, and their allies continue to base their grands projets, as the French would call them, on outmoded assumptions of exploding economic and population growth. Particularly revealing is the experience of the Residences at W Hollywood, a luxury-condo project located a stone’s throw from the proposed new high-rise towers in Hollywood. According to recent reports, only 29 out of 143 units have sold since the project opened in May 2010, despite prices that have been slashed by more than half. The market, in short, is unwilling to embrace density here, “elegant” or otherwise.

    Yet the city keeps planning big, as though hordes of the well-heeled were eager to move to L.A. It has offered massive subsidies, accounting for nearly $640 million in tax breaks, to three hotel projects. Public bonds are also underwriting expansion of L.A.’s convention center and a new football stadium, which received unheard-of exemptions from state and local environmental laws even though the city currently has no football team. “Everything we are doing, like the mass build-out of transit and density, provides an excuse for creating things people don’t want,” says Cary Brazeman, founder and president of L.A. Neighbors, a citywide alliance of neighborhoods, and a candidate for city controller in 2013. “To build this city back, you have to approach things in ways that enhance the gloriousness of L.A. Sunshine, it’s transcendental. You take away the sun, hell, I’m leaving my condo.”

    Without backing from rent-seekers or unions, Brazeman’s campaign runs on a shoestring. His better-funded opponent, former police officer Dennis Zine, epitomizes L.A.’s dysfunctional political system, drawing both his generous police pension and a city council salary of $178,000, the highest in the nation. Though he represents a largely residential area in the San Fernando Valley, Zine has proved a reliable vote for the elaborate “incentives” that encourage large, often uneconomic, building and ever-greater spending on transit projects. A more serious challenge to the existing order could come from Zev Yaroslavsky, a member of the Los Angeles County Board of Supervisors. Yaroslavsky hasn’t declared his candidacy for mayor yet, but he is known to be skeptical of the proposed remake of L.A. The question is whether he’s too comfortable with the status quo to take on the “elegant density” agenda.

    For now, the best hope for Los Angeles resides with the activists who meet at Victor’s. They may not scare the political incumbents or the real-estate developers, but they do represent a motivated opposition to the effort to recast the city. “Los Angeles started because people want to live here,” Abrams says. “We are not a cut-rate New York and don’t want to be. The developers and the politicians want to take away all that makes us unique and get rid of us tomorrow. It won’t be so easy.”

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in The City Journal.

  • America’s Future Is Taking Shape In The Suburbs

    For nearly a generation, pundits, academics and journalists have written off suburbia. They predict that the future lies in the cities, with more Americans living in smaller spaces such as the micro-apartments of 300 square feet or less that New York and San Francisco are considering changing their building laws to allow. Even traditionally spread out cities, such as Los Angeles, are laying out plans to create greater population density, threatening the continued existence of some neighborhoods of single-family homes.

    Yet wishing something dead does not make it so. Indeed, the suburbanization of America is likely to continue over the next decade. The 2010 Census — by far the most accurate recent accounting — showed that over 90% of all metropolitan growth over the past decade took place in the suburbs.

    Some central cities, notably New York, enjoyed decent population growth, but their increases were still below the national average. The Joint Center for Housing at Harvard notes that, only five metro areas —Boston, San Diego, San Jose, Calif., and the Florida cities of Cape Coral and Palm Bay — saw an increase in the share of households living in core cities relative to their suburbs and exurbs.

    To be sure, the Great Recession slowed the growth of suburbs, as many Americans lost the ability to achieve their dream of owning a single-family house. “Back to the city” advocates have seized on Census estimates for the past year that suggested that urban core growth has actually been a tad faster than that of suburbs.

    However, the Census Bureau numbers may be less accurate, and certainly less predictive, than many suggest. University of Pittsburgh urban analyst Chris Briem points out that in the last decade, some Census Bureau city estimates turned out to be vastly exaggerated compared to the actual 2010 Census. This was particularly true in Chicago and New York, where constant lobbying by city officials — after all, federal aid is distributed based on population estimates — meant that optimistic urban estimates turned out to be hundreds of thousands of people off.

    More amazing still, the Census Bureau essentially assumed that growth was even in all municipalities in a county. This bizarre practice projects that growth, say, in the city of Los Angeles, is equal to that of newer communities like Santa Clarita, or that suburbs of Alleghany County grew at the same rate as the city of Pittsburgh. This surely can’t be the case.

    Reporters concentrated in Manhattan and the District of Columbia didn’t look seriously at these numbers. They repeated the assumption that this was the result of mass migration, particularly among the young, out of suburbs and into cities.

    Yet in reality, there was no evidence of that trend. In fact, the Census Bureau’s core county estimates (which are demonstrably more accurate than the municipal estimates) showed a slight core county loss in domestic migration over the past year. The real story of the estimates has to do with the recession, which has led to record-low levels of mobility. Inter-county migration has fallen almost half from its 2006 level. Essentially, a historically weak economy has boosted the city share of population growth.

    So what can we expect in the future? Some cities will grow, but the vast majority of metropolitan growth will continue to take place in what are still car-dominated suburbs like areas areas. This can occur only the economy again get on a full-fledged growth cycle. Here some basic reasons not to write off suburbia.

    Inter-Regional Growth Patterns

    All 15 of the fastest-growing metropolitan areas of the past decade — led by places like Las Vegas, Raleigh, Phoenix, Houston and Dallas-Fort Worth — are sprawling and have low-density cores. Metropolitan areas with far denser cores, such as New York, Boston, Chicago, and San Francisco, tended to display below-average growth.

    These fast-growing cities tend to be suburban in form, dominated by single-family homes, automobile commuters and with dispersed economic centers. The growing central cities of Phoenix or Houston look more like places such as Long Island or Santa Clara than Manhattan or Chicago.

    Economic Shifts

    Many urban boosters cite a Santa Fe Institute study claiming that density creates productivity and economic growth. However, the study clearly dissociated itself from this argument, claiming that it did not matter if a region was shaped like Los Angeles, Atlanta or Houston, or New York or Boston. The source of productivity lay simply in a growing metropolitan population, the authors claimed.

    Overall, it’s questionable whether city economies perform better over time than the suburbs. Indeed, over the last decade, 81 percent of the population growth of core cities was among the poor, compared to 32 percent in suburbs. Poverty anywhere is a bad thing, but the claim, made repeatedly by some pundits that it is worsening more in suburbs turns out to be, well, just another urban legend. Overall poverty accounts for nearly one in four urban residents, twice the rate for suburbs.

    Energy Costs

    Ever since the energy crisis of the 1970s, pundits have predicted suburbanites would be forced to give up their cars. But higher energy prices have not slowed the suburban trend. With the current growth in new energy finds both here and abroad, the much heralded dawn of “peak oil” appears to be about as imminent as a balanced federal budget.

    Some terrified urbanists, like Bruce Fisher, director of the Center for Economic and Policy Studies at Buffalo State College, fear the new oil rush means “suburban real estate development will once again enjoy a comparative advantage over center city development.” In what some see as a catastrophe for both planet and urbanity, the car will remain dominant for the foreseeable future, despite three decades of massive spending on new transit systems across the country.

    Demographic Trends

    The advocates of a dense urban future usually point to demographics. Yet the formerly fashionable theory that retiring boomers would head en masse to cities turned out to be largely false. The last census showed the vast majority of aging boomers remained in the suburbs or moved further out into the periphery. “Back to the country” actually far outweighed “back to the city” in terms of boomer migration.

    Then there’s the other large generation of Americans, millennials, who are said to prefer an urban lifestyle. Yet surveys of millennials show a strong, often even more marked, preference for homeownership and suburban living than their parents.

    This will prove critical as many now urban millennials begin to enter their 30s and 40s over the next decade. Once they marry and start to have families, they will emerge, as the Harvard housing study notes as “the primary driver of new household formations over the next two decades.” Along with the other powerful force, immigrants, most seem likely to end up in suburban locales, if they can.

    Preferences Matter

    This does not counteract the fact that many young people will chose to settle in dense urban areas for their 20s and early 30s. Some urban cores, notably New York, Boston and San Francisco, will likely grow and get denser. But most others will see only modest, often fitful growth; despite massive public investment, for example, downtown Los Angeles, according to Zillow.com, has foreclosure rates worse than virtually anywhere else in the region.

    Preferences are the key here, particularly paying attention to what people want as they age. The 2011 Community Preference Survey, commissioned jointly by the National Association of Realtors and Smart Growth America, found that only a small minority — less than 10 percent — favored a dense urban location. Some 80 percent expressed preference for a single-family home.

    Over time, in a market-based economy, consumer preferences matter far more than those of pundits, professors or, for that matter, rent-seeking real estate developers. The only things that can kill off future suburban development would be forced densification by government edict or a continued miserable economy that entraps millions of the unwilling in dense urban areas.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in Forbes.

    Suburbs photo courtesy of BigStockPhoto.com.

  • The Rise of The 1099 Economy: More Americans Are Becoming Their Own Bosses

    While the economy has been miserable for small business, and many larger ones as well, the ranks of the self-employed have been growing. According to research by Economic Modeling Specialists International, the number of people who primarily work on their own has swelled by 1.3 million since 2001 to 10.6 million, a 14% increase.

    This rise is partially reflective of hard times, and many of the self-employed earn only modest livings in fields such as childcare and construction. However the shift to self-employment is likely to accelerate in the future, and into higher-paying professions, for reasons including the ubiquity of the Internet, which makes it easier for some types of business to use independent contractors, as well as the reluctance of large firms to hire full-time employees with benefits.

    Urban analyst Bill Fulton, who has looked into this issue, concludes we may be seeing a fundamental change in how the economy operates. “Even though there may not be jobs in the conventional sense, there is still work,” Fulton notes. “That’s the whole idea of the 1099 economy. It’s just a different way of organizing the economy.”

    If the 1099 economy is the wave of the future, which regions and industries are currently at the forefront? We turned to EMSI for the data. We looked at the change in self-employment numbers for the nation’s 30 largest metropolitan statistical areas from 2001 to the present, and also from 2008, when the economy first nosedived and people started to scramble.

    The results of EMSI’s research are fascinating, and somewhat surprising, perhaps giving us a glimpse of where the future of economic growth may be taking shape. The biggest changes have taken place in four metro areas where the number of self-employed workers expanded over 10% growth between 2008 and 2012. Two of them, Houston and Seattle, have done very well in our previous rankings of economic performance, and the other two, Phoenix and Riverside– San Bernardino, Calif., suffered grievously from the housing bubble.

    In the case of Houston, its 12% rise in the number of self-employed workers reflects not only widening economic opportunity, but also structural changes in the energy industry, the metro area’s prime economic driver. Since 2005, self-employment in the energy industry has grown 35% (and a remarkable 75% for support activities for oil and gas operations). At least part of this influx, EMSI suggests, could be attributed to land owners cashing in on royalties after leasing their property for drilling, but also to the demand for the increasingly specialized, and often high-tech, services required by that industry.

    The entrepreneurial drive in Houston is clearly not a response to economic disaster – the city has a culture that encourages striking out on your own, and low costs and lighter regulation make it easier. Indeed over the past decade, the Texas powerhouse also led the nation in the growth of its 1099 economy, which expanded by a remarkable 51%.

    Like the energy industry, the burgeoning high-tech sector also has become more dependent on the 1099 economy. Encompassing people writing apps, doing technical consulting,  and working in the information sector, the numbers have surged over the past five years. This may help explain the double-digit increase in self-employment over the past five years in Seattle (up 10%) and San Jose (up 11%). In some cases this may be young people working on their own; in others it could be older techies who may have lost full-time jobs but are now consulting.

    Perhaps the most intriguing shift to the 1099 economy can be found not in hotspots like Silicon Valley, but in areas pummeled in the “housing bust” that are only now showing signs of recovery. This includes two areas, Phoenix and San Bernardino-Riverside, Calif., usually disdained by “creative class” pundits as backwaters, that have seen their number of self-employed grow 12% since 2008.

    One contributing factor may be the migration of people to these areas from Southern California, says Rob Lang, a leading expert on economic trends who teaches at the University of Nevada-Las Vegas. For much of the second half of the 20th century, Southern California was, as historian Fred Siegel of the Manhattan Institute aptly put it, the nation’s “capitalist dynamo.” Unlike Houston with energy, or Seattle and San Jose with technology, the Southern California economy was broad based, spanning everything from aerospace and garments to homebuilding  and fast-food restaurants.

    Over the past generation, many heirs to this entrepreneurial tradition have decamped to the Sonoran Desert region, which stretches from California into Arizona, Lang says.

    Of course, Lang notes, Phoenix has long been disdained by urban aesthetes as environmentally “unsustainable”and doomed to economic decline. Its fate, according to accounts during the worst of the housing crash, was to be surrounded by “zombie sub-divisions” that would remain empty for years, perhaps permanently as the desert encroached.

    Yet as the strong self-employment numbers demonstrate, Phoenix may well be on its way to recovery. Brookings recently estimated its rebound since the Great Recession to be the fifth best of the nation’s 100 largest metro areas. Its unemployment rate has dropped from 12% in 2010 to around 7.5% in May 2012. Bankruptcies have fallen dramatically and the housing market is clearly on the mend.

    One clear sign of improvement is foreclosures have dropped 53% over the past year and are now below the national average.   Meanwhile net migration into Phoenix as well as the rest of Arizona is once again on the rise.

    This recovery, notes local economist Elliot Pollack, follows the typical cycle for Phoenix, led by entrepreneurial activity.  “Greater Phoenix is a small business town,” notes Pollack. ”Historically, during periods of growth, there is substantial new business and self employment formation.”

    Phoenix’s self-employment boom suggests that the Valley of the Sun is primed for a comeback. But not all of the top 30 metro areas are seeing anything like this level of new entrepreneurial activity. The 1099 economy has grown at less than half Phoenix’s rate in such “creative”  hotbeds as New York, Los Angeles, San Francisco and Boston. Self-employment is flat in many cities, including St. Louis, Cincinnati and Cleveland, and as actually declined in Kansas City, Chicago and Atlanta.

    It may be too early to declare which economies will finally rebound fully from the ravages of the Great Recession. But for my money, I’d look to those places where people are taking the leap to go out on their own as the ones most likely to reinvent themselves when the economy begins expanding robustly again.

    Rank Region Growth in Self-employed, 2008-2011
    1 Houston-Sugar Land-Baytown, TX 12.2%
    2 Riverside-San Bernardino-Ontario, CA 11.8%
    3 Phoenix-Mesa-Glendale, AZ 11.5%
    4 Seattle-Tacoma-Bellevue, WA 10.0%
    5 Baltimore-Towson, MD 8.6%
    6 San Antonio-New Braunfels, TX 8.1%
    7 Tampa-St. Petersburg-Clearwater, FL 6.5%
    8 Dallas-Fort Worth-Arlington, TX 6.3%
    9 Boston-Cambridge-Quincy, MA-NH 5.6%
    10 Miami-Fort Lauderdale-Pompano Beach, FL 4.9%
    11 Detroit-Warren-Livonia, MI 4.7%
    12 New York-Northern New Jersey-Long Island, NY-NJ-PA 4.6%
    13 Orlando-Kissimmee-Sanford, FL 4.4%
    14 San Francisco-Oakland-Fremont, CA 4.2%
    15 Sacramento–Arden-Arcade–Roseville, CA 4.2%
    16 Los Angeles-Long Beach-Santa Ana, CA 4.1%
    17 San Diego-Carlsbad-San Marcos, CA 4.1%
    18 Portland-Vancouver-Hillsboro, OR-WA 4.1%
    19 Pittsburgh, PA 2.9%
    20 Denver-Aurora-Broomfield, CO 2.9%
    21 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 2.8%
    22 Washington-Arlington-Alexandria, DC-VA-MD-WV 1.3%
    23 Cleveland-Elyria-Mentor, OH 0.6%
    24 Cincinnati-Middletown, OH-KY-IN 0.5%
    25 St. Louis, MO-IL 0.3%
    26 Las Vegas-Paradise, NV 0.3%
    27 Minneapolis-St. Paul-Bloomington, MN-WI 0.2%
    28 Kansas City, MO-KS -0.7%
    29 Chicago-Joliet-Naperville, IL-IN-WI -2.4%
    30 Atlanta-Sandy Springs-Marietta, GA -6.5%

     

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in Forbes.

    Self employment photo by BigStockPhoto.com.

  • The Tribal Election: Barack Obama Turns to the Karl Rove Playbook

    Move over, Iraq. Tribal politics have arrived at home.

    It’s not like our tribes will arm themselves, but American politics is developing a disturbing resemblance to Mesopotamia’s ever-feuding Sunnis, Shiites, and Kurds as the 2012 election rapidly devolves into a power struggle between irreconcilable factions rather than a healthy debate among citizens.

    The blame here falls in large part on President Barack Obama, who after four years of economic lethargy needs to recast the election as anything other than what it naturally is: a referendum on the incumbent and the state of the nation.

    To turn the page, he has revived the kind of divisive 50 percent–plus–one politics Bush political guru Karl Rove successfully championed in 2004. As former George W. Bush strategist Mark McKinnon has observed, Obama is now following the same playbook used in 2004 against another Massachusetts faux blueblood, Sen. John Kerry. Like Obama, Bush was a polarizing president of meager accomplishments and modest popularity. And like Bush, Obama is hoping to rally his base and demonize his opponent to achieve a fairly comfortable reelection.

    To do that, Obama is offering an array of appeals based on tribal totems—gay marriage, contraception, cheap loans for kids, charges of racism by his opponents. Every “grand” statement is aimed at specific groups, either to offer them something or to show how Romney would threaten their interests.

    It’s a self-perpetuating dynamic: as he’s aimed his appeal at targeted groups to cobble together a winning coalition, he’s consistently lost ground with middle- and lower-income white Americans. That in turn compels him to double down on his appeals to single women, gays, youth, and minority voters—which in turn further alienates working and retired white voters.

    Obama’s gambit creates an election in which turnout and mobilization—a fittingly military concept—of the faithful may be more important than the art of persuasion. It also guarantees a very ugly campaign, filled with even more than its usual share of innuendos, smears, and outright lies aimed at enthusing his base or—particularly for the GOP—discouraging members of unfriendly tribes from showing up to vote.

    Obama starts off with natural advantages in the tribal sweepstakes. He’s black, he’s got a “creative class” university pedigree, and he’s hip and cool, not to mention the first post-boomer president. It’s a powerful base for an electoral win.

    While Romney‘s core tribe, the Mormons, constitute less than 2 percent of the nation’s population. That’s a lot less than the Alawites who have constituted the core of strongman Bashar al-Assad’s support in Syria. (Of course, part of why Obama needs to cobble together a more complicated coalition is that Romney can also count on winning most white voters, who last favored a Democratic candidate in 1964.)

    But Obama and his party have been playing the race card with the aplomb of a Jim Crow Democrat. Assaults on the president or his attorney general, Eric Holder, are immediately blamed on “racism” by groups like the Congressional Black Caucus and “leaders” like the Rev. Al Sharpton—who compared the investigation into the Fast and Furious gun-running case to the stop-and-frisk policies in urban police departments.

    This appeal to race makes sense with African-American unemployment at its worst level in more than three decades and enthusiasm for the first black president understandably diminished since 2008. Tribal politics help cover up economic failings, as the old Dixiecrats did by using racism as a screen for the then-backward condition of their region.

    More recently, Obama has also directed his tribal charm at Latinos. Hispanic families, according to the census, have done the worst of all groups in the recession, losing 66 percent of their household wealth. Unemployment in the group hovers near 11 percent, and more than 6 million Hispanic children live in poverty—exceeding for the first time the number of black children living in poverty.

    Despite those sobering numbers, Obama is favored among Latinos by better than 2 to 1. This is in part because of Mitt Romney’s pivot to a hardline immigration stance during the Republican primary, as well as Obama’s election-year decree effectively giving mass amnesty to a large number of undocumented youth. Obama’s policy conversion is a seminal triumph for Latino politics, marking the group’s ascension into the first rung of American tribes. For many Hispanics, this was seen as an issue of family as well as identity.

    Obama has also worked hard to cultivate culture and gender-oriented tribes. The most obvious example of special-interest pandering was his well-timed “evolution” favoring gay marriage. Perhaps more important in terms of votes, the president’s conflict with the Catholic Church over contraception could appeal to single women, who now constitute a critical part of his base. Recent polling shows single women opting for the president by as much as 2 to 1.

    Then finally there are the millennials. In 2008, Obama could count on both their votes and their enthusiasm. Now amid hard times—particularly for the “screwed generation”—he has to appeal by offering lower interest rates for student loans and expanded aid to education.

    Against these powerful alliance of tribes, what can ultra-white-bread Romney do in response? No doubt he can win the majority of white evangelicals—the largest tribe in the GOP base—but it’s hard to see how they will be much energized for a man whose religion is widely considered a cult among some prominent evangelical preachers. As late as this month, Romney still has to pour time and resources into what has been in recent years a solidly GOP bulwark. At the same time, his other natural “base,” high-income earners in the private sector, is simply not numerous enough to push him even near the electoral requisite.

    To counter Obama’s tribal strategy, Romney has to move the discussion away from issues of race, gender, or immigration to the economy and unemployment, which, according to Gallup, remains far and away the dominant issue—with three times more voters calling it their primary concern than those for all social issues combined.

    Perhaps the most inviting tribal group for Romney to contest is the “youth vote,” whose members of course shift dramatically every four years as voters age in and out of the cohort. The poor performance of the current economy has already blunted the once widespread youthful enthusiasm for Obama; in 2008 turnout reached 64 percent among young people, the highest in 16 years. This year the portion of 18- to 24-year-olds who say they’ll definitely vote has fallen to 47 percent, according to polls conducted by Harvard University’s Institute of Politics.

    Overall, Democrats’ support among millennial voters has dropped from 66 percent in 2008 to close to 54 percent in 2010. Part of this may be because a vast majority of millennials, like other Americans, rank the economy as by far their greatest concern. Obama is already trailing the GOP candidate among white millennials by more than 20 points.

    Due in large part to the heavy minority cohort among millennials, Obama still should win this group in November, but the margin may be somewhat lower and the vote totals much reduced due to rising apathy, something that was notable in the 2010 election. Perhaps more troubling for Democrats, in the critical Scott Walker recall race in Wisconsin, more than 45 percent of voters between 18 and 29 voted for the GOP governor, who had garnered barely 40 percent of their support in his first race against Democrat Tom Barrett two years earlier.

    Other tribes could also be targeted, particularly American-born Latinos, who constitute about half the Hispanic adult population. They have been hard-hit by the recession and, according to a recent University of Arkansas study, tend to be somewhat more hardline on border control than their foreign-born counterparts.

    And even after his amnesty move, Obama’s support among Hispanics is only 57 percent compared with 67 percent four years ago.

    Of course, there are dangers to an ugly tribal win. While Bush significantly moderated his policies in his second term, he received little credit for that shift from the half of the country he’d alienated in 2004 and during his first four years in office.

    Another politician who’s recognized the dangers of tribalism? Barack Obama, circa 2007:

    "You’ve got to break out of what I call the 50-plus-1 pattern of presidential politics, which means you have nasty primaries where everyone’s disheartened, then you divide the country 45 percent on one side, 45 percent on the other, 10 percent in middle, all of whom live in Florida and Ohio," Obama told the Concord Monitor.

    "Then maybe you eke out a victory of 50 plus one. [But] you can’t govern."

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in The Daily Beast.

    Barack Obama photo by BigStockPhoto.com.