New Geography

Author: Joel Kotkin

  • ‘Protestant Ethic’ 2.0: The New Ways Religion Is Driving Economic Outperformance

    In this season when most Americans are more concerned than usual with spiritual matters, it may be time to ask whether religion still matters. Certainly religiosity’s worst side has been amply on display in recent years, from the fanaticism of Islamic terrorists to the annoying sanctimoniousness of Rick Santorum.

    On the surface, religion appears to be losing some of its historic influence. For the first time in a decade, according to a survey by the Pew Research Center, more Americans — excepting the Santorum base — want their politicians to talk less about faith as opposed to more.

    Organized religion in particular may be losing its appeal, particularly among the young. According to recent surveys, religious affiliation in the United States appears to be declining somewhat and secularism is on the rise; over the past 40 years the percentage professing no religious affiliation has grown over 140 percent while the percentage of the deeply faithful dropped 15%. The share of the population who claim “no religion” has risen to 15% overall and 22% of those between 18 and 29, notes a 2009 study by researchers at Trinity College. If these trends continue, the non-affiliated could represent a larger part of our population than the largest denomination, the Catholic Church.

    In large parts of the high-income world, notably Europe and parts of East Asia, the decline of religion is even more pronounced. Half of all Europeans, for example, have never attended a religious service, compared to just 20% of Americans. Roughly 60% of Americans, notes the Pew survey, consider religion important, twice the rate of Koreans, Japanese, Britons or even Canadians.

    Given that some of these countries have performed about as well or better than the U.S. in recent years, one might conclude that the historic link between religious faith and material progress — so central to the work of Max Weber – has been irretrievably broken. Yet in reality, the religious connection with economic growth may be still far more important than is commonly supposed.

    Many in the pundit class identify religion as something of a regressive tendency, embraced by the less enlightened, the less skilled, intelligent and educated. Yet some scholars, such as Charles Murray, point out that religious affiliation is weakening most not among the middle and upper classes but among the poorer and less educated who traditionally looked to churches for succor and moral instruction. Secularism may have not hurt the uber-rich or the academic overclass so far, but it appears to have helped expand our lumpenproleteriat.

    Some might be surprised to learn that religious affiliation grows with education levels. A new University of Nebraska study finds that with each additional year of education, the odds of attending religious services increased by 15%. The educated, the study found, may not be eschewing religion, as social science has long maintained, even if their spiritual views tend to be less narrow, and less overtly tied to politics, than among the less schooled.

    Overall the most cohesive religious groups — such as Mormons and Jews — still outperform their religious counterparts both in educational achievement and income. Both Jews and Mormons focus on helping their co-religionists, providing a leg up on those who depend solely on the charity of others or the state. In countries with a substantial historical Protestant influence such as Germany, Denmark, Sweden and the Netherlands continue to outperform economic the heavily Catholic nations like Italy, Ireland and Spain, according to a recent European study. The difference, they speculate, may be in Protestant traditions of self-help, frugality and emphasis on education. None of this, of course, would have been surprising to Max Weber.

    Religious people also tend to live longer and suffer less disabilities with old age, as author Murray notes. Researchers at Harvard, looking at dozens of countries over the past 40 years, demonstrated that religion reinforces the patterns of personal virtue, social trust and willingness to defer gratification long associated with business success.

    But perhaps the most important difference over time may be the impact of religion on family formation, with weighty fiscal implications. In virtually every part of the world, religious people tend to have more children than those who are unaffiliated. In Europe, this often means Islamic families as opposed to increasingly post-Christian natives. Decline in religious affiliation — not just Christian but also Buddhist and Confucian — seems to correlate with the perilously low birthrates in both Europe and many East Asian countries.

    Singapore-based pastor Andrew Ong sees a direct connection between low birthrates and weakened religious ties in advanced Asian countries. As religious ideas about the primacy of family fade, including those rooted in Confucianism, they are generally supplanted by more materialist, individualistic values. “People don’t value family like they used to,” he suggests. “The values are not there. The old values suggested that you grow up. The media today encourages people not to grow up and take responsibility. They don’t want to stop being cool. When you have kids, you usually are less cool.”

    Religious people, prepared to be seen as uncool, are more likely to seek to produce more offspring. In the United States 47% of people who attend church regularly see the ideal family size as three or more children compared to barely one quarter of the less observant. Mormons have many more children than non-Mormons; observant Jews more than secular. “Faith,” the demographer Phil Longman concludes, “is increasingly necessary as a motive to have children.”

    This pattern is reflected in the geography of childbearing. Where churches are closing down, most particularly in core urban areas such as Boston or Manhattan, as well as their metropolitan regions, singletons and childless couples are increasing. In more religiously oriented metropolitan areas like Houston, Dallas-Fort Worth, Salt Lake City and Phoenix, the propensity to have children is 15% to nearly 30% higher (as measured by the number of children under the age of 5 per woman of child bearing age– 15-49).

    In the future, many high-income societies, whether in East Asia, Europe or North America, may find that religious people’s fecundity is a necessary counterforce to rapid aging and eventual depopulation of the more secular population . The increasingly perilous shape of public finance in almost all advanced countries — largely the result of rapid aging and diminished workforces — can be ascribed at least in part to secularization’s role in falling birthrates.

    There may be other positive fiscal effects of religiosity. Religious people donate on average far more to charities than their secular counterparts, including those unaffiliated with a religion. Nearly 15% of the religious volunteer every week compared to just 10% among the secular.

    Social networks, much celebrated among the single, might provide people with voices, but religious organizations actually do something about meeting real human needs. Organized religion provides a counterweight to the European notion that we must rely on government for everything. Poor people educated or fed by the charities of mosques, churches, and synagogues relieves some of the burden faced by our variously tottering states and shredding social welfare nets. Aging baby boomers, notes author Ted Fishman, may be forced to rely more on the “kindness of strangers” from religious backgrounds to take care of them in their old age.

    Sadly few prominent religious leaders deliver this message effectively, often preferring to scold non-believers. This is unfortunate since what the faithful do in the real world, at home and in their communities, may prove ever more crucial to the viability of our societies in the future.

    This piece originally appeared in Forbes.com.

    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.

    Church near Wall Street photo by Flickr user Roger Schultz.

  • How A Baby Bust Will Turn Asia’s Tigers Toothless

    For the last two decades, America’s pundit class has been looking for models to correct our numerous national deficiencies. Some of the more deluded have settled on Europe, which, given its persistent low economic growth over the past 20 years and minuscule birth rates, amounts to something like looking for love in all the wrong places.

    More rational and understandable have been those who have looked for role models instead in East Asia. After all, East Asia has been the world’s ascendant power for the better part of past 30 years. It is home to both China and Japan, the world’s second and third largest economies, as well as the dynamic “tiger” economies of Korea, Taiwan, Hong Kong and Singapore.

    Thomas Friedman, long enamored by authoritarian leviathan China, recently praised the tiger countries as exemplars of forward thinking. He traces their strong emphasis on “highly effective teachers, involved parents and committed students” as keys to turning their resource-poor countries into first world successes.

    Yet for all their laudably good school test scores, these tigers could turn somewhat toothless in the future. Already Japan, which fashioned the first great Asian model, is beset by a series of massive challenges including a lack of technological competitiveness and disastrously declining demographics. They also face competition from places like China and India, behemoths which may not equal the Tigers’ spectacular per-capita education numbers, but which can marshal overwhelming numbers of ambitious, educated and skilled people.

    Many in the tiger nations recognize this competitive plight far more than their western cheerleaders. Some even wonder if they may even have been too rational and credential-obsessed for their own good. Like Japan after the Second World War, they invested heavily in educating their young people to excel on tests and work long hours . But this also fostered high levels of stress and hyper-competition that discourages both family formation and child bearing .

    Singapore (where I serve as Senior Visiting Fellow at the Civil Service College) is arguably the best planned and most cleverly conceived of all the Tigers. Singaporeans live well — their per-capita incomes surpass those of Americans — but this edge is largely blunted by extremely high costs. As in all the Tiger countries, consumer goods like cars are extraordinarily expensive (a modest Korean model can run upwards of $75,000 or more in Singapore) and housing costs far higher than experienced by most Americans. In Hong Kong, notes researcher Wendell Cox, an average apartment, usually quite small, costs roughly twice as much as one  in New York or San Francisco, two most elite metro U.S. markets, relative to income.

    These conditions, observes Vatsala Pant, a former Nielsen executive and long-time Singapore resident, create what amounts to an accounting-like mentality about their lives. “Singaporeans seem to be born with a calculator in their heads,” she notes. “Every decision seems to weighed in a cost and benefit analysis, including such things as family. If it’s not perfect, they don’t want it.”

    This turn from family represents a sharp break in these countries. All the “tiger” economies flourished based on a Confucian culture that places kinship at the top of the value pyramid. Parents are still widely revered, but Li Lin Chang, an associate director of the Lee Kuan Yew School of Public Policy, suggests that Singapore’s “Confucian roots may not be as evident and some may argue that it may have disappeared.”

    Certainly increasing number of Singaporeans and others from Tiger countries are opting out of marriage. In 2000, 14% of women between age 30-39 chose to remain childless, according to demographer Gavin Jones of the National University of Singapore. By 2009, this figure has gone up to 20%. Jones estimates in some east Asian societies up to a third of all women will remain childless.

    Japan, the original model for all these countries, is now leading the way off the demographic cliff. In Japan, notes researcher Mika Toyota, 20% of 50-year-old males have never married, up from 12 percent just a decade ago. By 2030, she estimates nearly 30% of 50-year-old males will have never wedded. And unlike the U.S. and Europe, very few people have children out of wedlock in East Asia, so no marriage means no children.

    This plunge in marriage and family formation is not entirely voluntary. Few of the 40 or more Singaporean younger adults I have interviewed in recent months celebrated singleness like some of their Western counterparts. Most still wanted children and linked their reluctance to wed or to have babies on the high cost of living, intense competition in their workplace and even increasingly crowded mass transit.

    “Most of my friends are not married,” one 35-year-old female civil servant told me. “They don’t want to be single but they are too busy with their work commitment. My friends are consumed by work. Money, status, prestige, climbing the ladder. You expect things to change when you get older but it doesn’t. The calculation just doesn’t work out”

    For many of these people, not having offspring makes sense in terms of concentrating on career goals and reducing financial pressure. But it could prove a social disaster in the long run. All Tiger nations now suffer fertility rates roughly half the 2.1 children per household needed to replace the current population. By 2030 these countries could have fewer people under 15 than over 60.

    Not surprisingly, many Tiger country policymakers place a priority on producing more cubs. Most offer highly generous packages of support offered to those willing to take the nativity plunge. Some who have children cope with entrenched male reluctance to share in child-raising by relying on low-cost maids, often from the Philippines and other poorer countries. A recent move by the Singapore government to require giving maids the day off elicited howls of protests from female professionals, who, as authors Teo You Yenn and Vivienne Wee put it, regard “care of one’s own offspring as tedious, beneath oneself and rightfully the responsibility of a hired woman.”

    Some professionals who desire children consider taking their finely honed skills elsewhere. A recent survey by the MRI China Group showed that a majority of professionals surveyed in Taiwan and some forty percent in Singapore, as well as roughly one-third of those in Hong Kong, were actively looking to relocate to another city. Most covet a move to less high-pressure, lower-density Australia or New Zealand. Others, particularly from Taiwan, are attracted to greater opportunities in China.

    There may not be too much the bureaucracies can do immediately to address these problems. Clearly adding more degrees per capita or bringing in more foreign expertise, as is common in Singapore and Hong Kong, has not addressed looming baby shortage. Instead, as one one young University researcher put it, “we need a new mindset.”

    Most particularly, these countries need to change the incentives that, albeit unintentionally, create unsustainable levels of singleness, childlessness and the prospect of massive, rapid aging of their societies. They may have to consider more flexible work-styles, the promotion of home based business and better use of their limited space. Individual entrepreneurship, more rooted in each country and able to meld with family life, could be stressed as a counterbalance to employment in often fickle multinational corporations who can always move to greener, or at least cheaper, locales.

    More difficult still will be shaping attitudes that restore the primacy of family that propelled these societies in the first place. This is an existential challenge that would have seemed unimaginable 40 years ago when these countries fretted about overpopulation and widespread poverty. But success in the future can not be purchased by simply continuing what has worked so well for a generation. To avoid a toothless future, the Tigers need to unlearn some of the secrets of their past success.

    This piece originally appeared in Forbes.com.

    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.

    Singapore skyline photo by Bigstockphoto.com.

  • The Expanding Wealth Of Washington

    Throughout the brutal and agonizingly long recession, only one large metropolitan area escaped largely unscathed: Washington, D.C. The city that wreaked economic disasters under two administration last year grew faster in population than any major region in the country, up a remarkable 2.7 percent. The continued steady growth of the Texas cities, which dominated the growth charts over the past decade, pales by comparison.

    Boom times in the capital — particularly amidst a weak recovery elsewhere — are driving this growth. Since 2007, notes Stephen Fuller at George Mason University, the D.C. region’s economy has expanded 14 percent compared to a mere 3 percent for the rest of the country. Washington’s unemployment never scaled over 7 percent, well below the national average, and is now down to around 5.5 percent, about the lowest of any major metropolitan area. Unemployment of course is much higher, reaching 25 percent, in some of the district’s poorer neighborhoods.

    This prosperity is rooted largely in the steady growth of the federal workforce, as federal spending accounts for one-third of the region’s economy. Over the past decade 50,000 bureaucratic jobs have been added in the area while local federal spending grew 166 percent. The D.C. region, with but 5 percent of the nation’s population, garners more than three times that percentage in payroll and more than four times that percentage in procurement dollars.

    This debt-financed gusher has helped expand the economy beyond simply federal workers. You think California is the biggest beneficiary of the current tech boom? Think again. Washington’s tech sector employment , according to an analysis by Economic Modeling Systems Inc., has expanded by over 5 percent since 2009, more than twice the national and California average of barely 2 percent. California may have Facebook, Google and Apple, but Washington tech has federal agencies, the defense establishment, a growing media sector and the lobbying industry to feed upon.

    Washington also ranks fourth in middle-income job growth, with employment in that category expanding at four times the national average over the past two years. The relatively higher salaries — and far better benefits — propel even modestly educated workers into middle incomes. The recession may have been brutal for the middle class, but not those who work for Uncle Sam. Not surprisingly, according to Gallup, Washingtonians are the most optimistic in the country about the improvements in the economy.

    This, of course, did not start with the Obama administration’s relentless expansion of federal power. The Washington region has been growing steadily — well ahead of all major eastern regions — for a generation. The expansion of defense spending under President Ronald Reagan and then again under George W. Bush helped create wealthy suburbs around the city; four of the nation’s five wealthiest counties (the other is in suburban New Jersey) and nine of the top 15 are located in the Virginia and Maryland suburbs around the capital. These counties all enjoy median house incomes over $100,000, twice the national average.

    But the biggest change has occurred in the district itself, which last led the nation in population growth in the early 1940s. The hopelessly dysfunctional, crime-ridden city of the era of four-term Mayor Marion Barry in the 1970s and ‘80s has been left behind like the much-maligned 19th century swamp town that aspired to be the next Paris but was widely regarded by diplomats as a hardship posting. Barely three decades after its founding, the city had “not a single great mercantile house,” a foreign dignitary observed in 1811-12, according to “The Age of Federalism,” by Stanley Elkins and Eric McKittrick, and had “a total absence of all sights, smells, or smells of commerce.”

    Washington may still not be a great center of real commerce, where people make things or risk their livelihoods on ideas. But it thrives as the marketplace for the collusional capitalist state that has been growing for decades and may now be at its apex. Offices fill with well-paid lobbyists and lawyers, and their service help, as they protect the interests of investment banks, real estate interests and unions that are increasingly influenced by Washington. The central area has been revived by new condo, hotel and office developments. It may still not be Paris, or even Chicago’s Gold Coast, but it’s a fair bit better than the drab, dangerous place of 30 years ago.

    No one should ever disparage the success of a region, but there is something disturbing in D.C.’s recent rise. Most expansions of the federal region came to meet a perceived national challenge: the Depression, the Second World War, the Cold War, the Space Race and the Civil Rights movement. Since the Depression, Washington’s “good times” usually have paralleled that of the rest of the country. Only now do we see a “new normal” where Washingtonians, like the pigs in Orwell’s Animal Farm, seem “a bit more equal” than the rest of us.

    Will this trend continue? The outcome of the election may prove determinative. In a second Obama term – which should bolster the power of agencies such as the EPA, Energy and Justice – the federal grip on daily life will expand. This could greatly expand the appeal of being close to the capital. When everything from zoning and the location of industrial plants and healthcare is under Washington’s control, the capital could conceivably even emerge as a challenger to New York’s two century reign as the country’s most important city.

    Yet as the Washington Post’s Steve Pearlstein points out, this ascendency could be curtailed. Even under a second Obama administration, he notes, “the federal gravy train” could be derailed, with inevitable cuts in spending. Steve Cochrane at Moody Analytics suggests that the Washington as “the leader in terms of job growth and economic strength are really over.”

    The election certainly will determine which part of the Washington ox get gored. If Democrats rule, one can expect these cuts to come in large part at the expense of defense firms, which, after all, now tilt to the Republicans. This could be particularly tough on the suburbs, where many military contractors reside.

    More dangerous still would be a Republican sweep, which would bring a budget-cutting mentality back to the White House, particularly on the social spending and regulatory apparatus dear to many Democrats . These jobs tend to be in the district. Even a renewal of the current balance of power threatens federal expansion since the House still holds the appropriation purse strings. The oxygen that sustains Washington seems likely to be cutback in any case.

    None of this, however, means that D.C. is about to slip back to its dystopian past, much less its swampy roots. The region boasts the nation’s wealthiest and best-educated population. This could give it a leg up on other areas in the tech and business service job markets. Many millennials may find a steady career in the bureaucracy safer, and even more satisfying, than finding places in a slow-growing, hyper-regulated private sector economy.

    Yet the key lies to Washington’s future may lie with the fate of the national economy. Eighty years of relentless federal expansion has created a relentless parasite that knows how to feed on its host. But if that host weakens, so too will the federal state. To sneak an early pick for this scenario, hop a flight to Madrid, Rome or Athens, where being tied to the bureaucracy no longer provides exemption from the vicissitudes of economic struggle.

    This piece originally appeared in Forbes.com.

    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.

    Washington, DC photo by Bigstockphoto.com.

  • Rick Santorum’s Ugly Appeal to Rural Voters

    Not all of them are “clinging to guns and religion,” as Barack Obama famously said in 2008, but Rick Santorum has catapulted to the top of the Republican field by connecting with a bitter streak among rural voters. This is bad news for the Republican party and for rural America, which in fact has some pretty good reasons to be optimistic.

    Urbanites, Santorum told South Carolinians in January, have “a whole different value structure…They’re not going to be participating in small-town life. They’re not going to be connected to mainstream America or to God and his creation.”

    Those voters have returned the contempt, with Mitt Romney consistently winning in larger metropolitan areas. Rick Santorum, by contrast, has from his campaign’s modest beginnings in the small towns of Iowa drawn the bulk of his support from the least-populated counties.

    “I kept saying, you just stick with us, you go out and vote for your values and trust what you know,” Santorum said after his victory in the Kansas caucuses in March. “Because you don’t live in New York City. You don’t live in Los Angeles. You live like most Americans in between those two cities, and you know the values you believe in.”

    Santorum—who last I checked lived in swank, suburban Washington—has become the candidate of rural and small-town inertia, representing the isolated, aging, often modestly educated and overwhelming white residents nostalgic for a fading past. The Santorum worldview, following a tradition that well precedes Sarah Palin, portrays a wholesome, small-town middle America fighting a desperate battle against corrupt coastal big-city “elites.”

    The problem for the party if he somehow emerges as the Republican nominee is that most voters live in metropolitan areas. Just 16 percent of Americans live on farms, small hamlets, and villages. The problem for those rural Americans is that Santorum’s campaign of complaint appeals to and reinforces the worst stereotypes of rural life, while overlooking the brighter future already emerging in much of the hinterland.

    Rural America, particularly the vast region known as the Great Plains, appears to be on the verge of an economic and cultural renaissance. I live in Los Angeles, but have witnessed a remarkable change in both on the ground reality and mood during numerous visits to and studies of rural areas over the past decade. When I first starting going to Fargo, North Dakota, it seemed just a listless prairie town; today it is full of high-tech firms and boasts a downtown bustling with a vibrant, youthful population of attractive, largely Nordic revelers.

    To be sure, many small towns in the Plains and elsewhere are shrinking and some will disappear entirely in the coming decades. But larger towns like Fargo, Bismarck, Sioux Falls, Omaha, as well as many smaller ones, now boast the strongest economies in the country—with low unemployment and strong job and income growth. Most of these cities enjoy positive in-migration not only from the rural hinterland, but from the densely packed coastal areas. The Plains’ population growth is already outpacing the national average, and is even further ahead of the urban core cities so celebrated in the media.

    Santorum seems to have missed something in his travels back in time. He may appeal to an imagined, largely self-contained rural Eden—but he’s mostly ignored the global economics that have fueled the rural resurgence.

    Start with the basics: the production of food and fiber, which is fundamental not only to the Plains but to the Midwest, central California and the cotton-growing regions of the Southeast, Arizona, and west Texas. It’s the global demand for these products that has created good times in small towns. In 2011, the U.S. exported a record $135 billion in food and fiber, with a net positive balance of $47 billion, the highest in nominal dollars since the 1980s. Santorum as a senator opposed NAFTA and now talks about engaging in a trade “war” with China. Yet developing countries constitute rural America’s fastest-growing market. Many nations lack the water and land resources to feed themselves at a higher per-capita level of consumption; Beijing has acknowledged this by effectively dropping the old Maoist goal of self-sufficiency.

    Foreign investment flows have also benefited rural communities, particularly in the Southeast and the Plains. Firms are investing in critical sectors such as manufacturing and energy that benefit rural communities. Industrial investment rose $30 billion just between 2009 and 2010, while investment in the energy sector more than tripled to $20 billion.

    Japanese, German, and Korean manufacturers are primary players laying the foundation for a rural and small-town resurgence across the long-suffering rural Southeast.  Last year, Mercedes, whose largest U.S. plant is in Tuscaloosa, Ala., invested $350 million in the facility. Arch competitor Volkswagen last year announced it will build a new assembly plant in Chattanooga, Tenn. Nissan, Toyota and Kia have all announced major new plant openings or expansions in the region, mostly in small rural towns (and, it’s worth mentioning, in “right-to-work” states that don’t allow closed union shops). When Toyota recently announced plans to establish a plant for the Prius near Tupelo, Mississippi (the birthplace of Elvis), they received 35,000 applications for 1,300 positions.

    At the same time, increased fossil-fuel demand in global markets has sparked energy giants from China, France, and Spain to take up stakes in fields in Ohio, Mississippi, Colorado, and Michigan. A smart, globally minded Republican would be pushing these investments, which are already creating boom from North Dakota to south Texas. President Obama’s urbane academician’s obsession with subsidizing renewable energy and barely disguised disdain for fossil fuels represents a threat to the continued prosperity of many rural communities and small towns.

    Critically, Santorum’s regressive social views—his tone of resentment as much as the particulars—belies the kind of openness needed for a full-scale rural revival. In the real world, rural America is becoming increasing diverse and dependent on immigrant labor.

    Plains towns like Grand Island, Nebraska, are filling up with Mexican or Honduran restaurants. The percentage of foreign-born Nebraskans has more than tripled since 1990. The GOP electorate in the Cornhusker State may be overwhelmingly white, but the demographic trends suggest this won’t always be the case—so long as the party can avoid alienating these new arrivals.

    In many places Hispanics constitute the major counterforce to wholesale depopulation. Every county except one in the western half of Kansas suffered depopulation of non-Hispanic whites during the past decade, while Hispanics have offset or even exceeded the decline in white population—filling schools and opening businesses in the process. Hispanic residents have pushed from hubs like nearby Dodge City, Garden City, and Liberal into ever smaller communities, buying property on the cheap, enticed, many say, by the opportunity to live quiet lives in communities more similar to those in which they were raised. 

    Of course many people—notably some of the older white voters flocking to Santorum—are hostile to these realities.  And in the short run, appealing to anti-immigrant sentiments may pay off in the Republican primary. But over time, if they are to survive, many rural communities will either adjust to diversity or simply disappear.

    But perhaps the worst betrayal of rural America lies in denying the aspirations of these places to shed off the historic isolation and overdependence on natural resources that have long dogged them. Santorum may consider a college education “elitist,” and see public schools as akin to “factories,” but in many parts of the Great Plains and elsewhere excellent public schools are cherished by Republicans and Democrats alike. A core competitive advantage of many rural states lies in their surplus of  highly educated young people. Students in Nebraska, the Dakotas, Montana, and Idaho tend to perform better in school than those in more metropolitan ones (as measured by graduation rates, college attendance, and enrollment in upper-level science and education programs).

    These educational advantages are being bolstered by in-migration now tilted toward younger families seeking opportunity, affordable housing, greater social cohesion and better schools. And with generally stronger fiscal balance sheets, due largely to the booming agriculture and energy sectors fueled by international demand, many rural states are expanding their public university systems even as states like California are cutting theirs.

    By appealing to perceived deficiencies in rural communities, Rick Santorum downplays all these positive forces. Much of rural America is already booming, and, connected by the Internet, investment, and trade, can play an important role in the American future. Appealing to nostalgia about a past fading into history is not the way to get there.

    This piece originally appeared in The Daily Beast.

    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.

    Rick Santorum Image by Bigstockphoto.com.

  • The Republican Party’s Fatal Attraction To Rural America

    Rick Santorum’s big wins in Alabama and Mississippi place the Republican Party in ever greater danger of becoming hostage to what has become its predominate geographic base: rural and small town America. This base, not so much conservatives per se, has kept Santorum’s unlikely campaign alive, from his early win in Iowa to triumphs in predominately rural and small-town dominated Kansas, Mississippi, North Dakota and Oklahoma. The small towns and rural communities of states such as Michigan and Ohio also sheltered the former Pennsylvania senator from total wipeouts in races he would otherwise have lost in a blowout.

    If America was an exclusively urban or metropolitan country, Mitt Romney would be already ensconced as the GOP nominee and perhaps on his way towards a real shot at the White House. In virtually every major urban region — which means predominately suburbs — Romney has generally won easily. Mike Barone, arguably America’s most knowledgeable political analyst, observes that the cool, collected, educated Mitt does very well in affluent suburbs, confronting President Obama with a serious challenge in one of his electoral sweet spots.

    Outside the Mormon belt from Arizona to Wyoming, however, sophisticated Mitt has been a consistent loser in the countryside. This divergence between rural and suburban/metro America, poses a fundamental challenge to the modern Republican Party. Rural America constitutes barely 16 percent of the country, down from 72 percent a century ago, but still constitutes the party’s most reliable geographic base. It resembles the small-town America of the 19th century, particularly in the South and West, that propelled Democratic Party of Nebraska’s William Jennings Bryan to three presidential nominations.

    Yet like Bryan, who also lost all three times, what makes Santorum so appealing in the hinterlands may prove disastrous in the metropolitan regions which now dominate the country. Much of this is not so much particular positions beyond abortion, gay rights, women’s issues, now de rigueur in the GOP, but a kind of generalized sanctimoniousness that does not play well with the national electorate.

    We can see this in the extraordinary difference in the religiosity between more rural states, particularly in the South, and the rest of country. Roughly half of all Protestants in Mississippi, Alabama and Oklahoma, according to the Pew Center on Religion and Public Life, are evangelicals, not including historically black churches. In contrast, evangelicals make up a quarter or less of Protestants nationally and less still in key upcoming primary states such as Pennsylvania, New York, California and Connecticut, where the percentages average closer to 10 percent.

    Let me be clear: Urbanity is not the key issue here. Cities have become so lock-step Democratic as to be essentially irrelevant to the Republican Party. Instead it’s the suburbs — home to a record 51 percent of the population and growing overall more than 10 times as fast as urban areas — that matter the most. Much of the recent suburban growth has taken place in exurbs, where many formerly rural counties have been swallowed, essentially metropolitanizing the countryside.

    What accounts for the divergence between the suburban areas and rural areas? A lot may turn on culture. Small towns and villages may be far from the isolated “idiocy of rural life” that Marx referred to, but rural areas still remain someone more isolated and still somewhat less “wired” in terms of broadband use than the rest of the country.

    Despite the popularity of country music, rural residents do not have much influence on mainstream culture. Most Hollywood executives and many in New York still commute from leafy ‘burbs. Few of our cultural shapers and pundits actually live predominately in the countryside, even if they spend time in bucolic retreats such as Napa, Aspen or Jackson Hole.

    Until the recent commodity boom, much of rural America was suffering. And even today, poverty tends to be higher overall in rural areas than in urban and especially suburban countries. Some areas, notably in North Dakota and much of the Plains, are doing very well, but rural poverty remains entrenched in a belt from Appalachia and the deep South to parts of west Texas, New Mexico and California’s Central Valley.

    Rural areas generally do not have strong ties to the high-tech economy now leading much of metro growth. This remains a largely suburban phenomenon, urban only if you allow core cities to include their hinterlands. All the nation’s strongest tech clusters — Silicon Valley, Route 128, Austin, north Dallas, Redmond/Bellevue in Washington, Raleigh-Durham — are primarily suburban in form. High tech tends to nurture a consciousness among conservatives more libertarian than socially conservative and populist. Not surprisingly, libertarian Ron Paul often does best in these areas and among younger Republican voters.

    Another key difference: a lack of ethnic diversity. There are now many Hispanics living in rural areas, but they are largely not citizens and most are recent arrivals, attracted by jobs in the oil fields, slaughterhouses and farms. Many small towns, unlike suburbs, remain more homogeneous than suburbs, emerging as the most heterogeneous of all American geographies. Ethnic cultural cross-pollination occurs regularly in metropolitan suburbs; this is not so common in rural America.

    Equally important, environmental issues spin differently in rural areas than in suburbs. Energy development and agriculture drive many rural economies. In some areas, like Ohio and western Pennsylvania, shale oil and gas is bringing long moribund regions back to life. In the Dakotas, parts of Louisiana, Texas and Wyoming, it is ushering in a potentially long-term boom. In contrast, there aren’t many oil and gas wells located next to malls and big housing tracks.

    This does not mean that suburban voters share the anti-fossil fuel green faith of the urban core. But for them “drill baby drill” represents more a matter of price at the pump than a life and death issue for the local economy. Suburbanites feel the energy issue, but do not live it the way more rural communities do. One of the great ironies of American life is that those who live closest to nature are often less ideologically “green” than those, particularly urbanites, residing in an environment of concrete, glass and steel.

    Rural America, of course, is changing, with many areas, particularly in the Plains, getting richer and better educated. These areas are growing faster than the national average and attracting immigrants from abroad and people from other U.S. regions. Yet the influence of newcomers, new wealth and new technology is still nascent. The political pace in rural America today still is being set by an aging, overwhelmingly white and modestly educated demographic.

    Until the Republican nomination fight is settled, the party’s pandering to the sensibilities of such conservatives in rural areas could prove fatal to its long-term prospects. A Santorum nomination almost guarantees a replay of the Bryan phenomena; no matter how many times he runs, he will prove unlikely to win, even against a vulnerable opponent. Even in losing, his preachy, divisive tone — on contraception, prayer, the separation of church and state — has opened a gap among suburban voters that Obama will no doubt exploit.

    The suburbs, with its preponderance of white, middle income independent voters, gave the 2008 election to Obama, and that’s where the next contest will be decided. The countryside will rally to a GOP standard bearer like Romney, albeit somewhat reluctantly, for both economic and social reasons. The battle will then shift to the suburbs, including those urban areas, common in the vast cities of the South and West, that are predominately suburban in form.

    Most of the urban core, meanwhile, will vote lockstep for Obama. But the president, as thoroughly a creature of urban tastes and prejudice as to ever sit in the White House, could prove vulnerable in the suburbs, if the Republicans can deliver a message that is palatable to that geography’s denizens.

    This piece originally appeared in Forbes.com.

    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.

    Rick Santorum Image by Bigstockphoto.com.

  • Foreign Industrial Investment Is Reshaping America

    Declinism may be all the rage in intellectual salons from Beijing to Barcelona and Boston, but decisions being made in corporate boardrooms suggest that the United States is emerging the world’s biggest winner. Long the world leader as a destination for overseas investment, the U.S. is extending its lead as the favored land of overseas capital.

    Since 2008, foreign direct investment to Germany, France, Japan and South Korea has stagnated; in 2009, overall investment in the E.U. dropped 36%. In contrast, in 2010 foreign investment in the U.S. rose 49%, mostly coming from Canada, Europe and Japan. The total was $194 billion, the fourth highest amount on record.

    Foreign investment is already reshaping the American economic landscape, shifting wealth and income from differing regions. The transformative role is nothing new. After all, the country started as a colony of England, and for much of the 19th century remained dependent on European investors for everything from building canals to railroads. Without European capital, the settlement of the West and the rise of cities such as New York would have been far slower.

    Today this pattern is re-asserting itself as foreign countries rediscover America’s intrinsic advantages: a huge landmass, vast natural resources, a large, expanding consumer market and a relatively predictable legal system. Our relatively vibrant demographics — at least before the Great Recession depressed birthrates and immigration — marks a strong contrast with such key countries as Japan, South Korea and Germany, all of which are aging far more rapidly than the United States. China’s authoritarian political system leaves many investors reluctant to expose themselves too much to the regime’s often less than tender mercies.

    The investment boom is concentrated not so much in the most celebrated sectors, such as tech or trophy real estate, but in the more basic industries that are best suited to our large, resource-rich country. Investment in the burgeoning energy sector more than tripled to $20 billion between 2009 and 2010. Some of this investment has come into the renewable industry, where Europe and China also have heavily subsidized companies, but the vast bulk has been devoted to the country’s expanding production of oil and gas.

    The shale revolution in particular has attracted foreign interest. Energy firms from China, France and Spain have all placed major investments in the shale fields of Ohio, Colorado and Michigan. French giant Total recently paid $2.3 billion for minority stakes in the vast oil and gas holdings of Chesapeake Energy.

    Perhaps even more important has been a surge in industrial investment, which rose $30 billion just between 2009 and 2010. Much of this growth is concentrated in the chemical industry as well as automobile, steel and other transportation sectors. It is also heavily focused on the southeastern states and Texas — the very places that most surveys reveal have the most hospitable business climates. According to a recent study by Site Selection magazine, the five states with the best business climates and 10 of the top 12 are from the old Confederacy.

    Foreigners, particularly from large global corporations, are not stupid. They also are not burdened as much as domestic firms with legacy costs or romantic attachments to traditional industrial bailiwicks. “At the end of the day, a company looks at a whole nation and looks at the factors that matter most, like ease of doing business,” notes Bill Taylor, who for 17 years headed up Mercedes’ U.S. operations. “The Southeast has that and has a workforce willing to be engaged. They have found the area to be very fertile ground.”

    This has certainly been true for companies such as Mercedes, whose largest U.S. plant is in Tuscaloosa, Ala. Last year the company invested $350 million in the facility.

    Nor is Mercedes alone. Arch competitor Volkswagen last year announced it will build a new assembly plant in Chattanooga, Tenn. Nissan, Toyota and Kia have all announced major new plant openings or expansions over the past three years throughout the region.

    These are not inconsequential investments. With the average cost of building these facilities at over $1 billion, and the higher-paying manufacturing jobs they represent, such plants represent major employment generators. They also bring with them parts suppliers and other industries related to auto manufacturing. Alabama, for example, has seen major steel mill investments, including $4.6 billion from Germany’s Thyssen Krupp.

    Over the next decade, these investments could transform the nation’s industrial structure. Alabama and Kentucky already produce almost as many cars as Michigan. According to the U.S. Dept. of Labor, Michigan still leads the country in auto employment with 181,000 jobs, followed by Indiana. But the next three states are Kentucky, Tennessee and Alabama.

    Why is this happening? Managers in foreign firms, suggests Taylor, who previously worked for Ford and Toyota, believe Southern workers have not picked up the bad habits and work rules common among their unionized Midwestern brethren. Unions certainly are much less of an issue in the Southeast. Though Alabama has seen a huge jump in the number of its auto workers in recent years, according to its state department of labor, only 7,100 are unionized. Nationwide, according to the Bureau of Labor Statistics, around 12 percent of workers belong to unions, compared to just over 10 percent in Alabama. Less than 5 percent of workers in Georgia, Texas, South Carolina, Virginia and North Carolina belong to them.

    Unions are not the only issue. The South also enjoys a strong network of rail and highway lines that make transport to key markets easy and affordable. Energy costs tend to be lower. Furthermore, many Southeastern port cities — notably Houston, Charleston, Mobile, Hampton Roads — have made big infrastructure investments in recent years.

    The Southeast also plans to become a research hub for the auto industry. The Clemson University International Automotive Research Center is the nation’s only school to offer a Ph.D. in automotive engineering and has secured $200 million in commitments. Additionally, the South Carolina center has created partnerships beyond auto manufacturers with other universities in the area: Auburn, Mississippi State, Alabama, Alabama-Birmingham, Kentucky and Tennessee.

    The overall impact of the Southeast’s auto industry may not be fully felt for a few years. But long-term prospects are excellent. U.S. manufacturers, notably GM and Chrysler, make most of their money on fuel-guzzling trucks and SUVs. GM’s Volt, its much-hyped fuel-efficient car, has so far proved an expensive dud. In contrast, the major foreign manufacturers — particularly Volkswagen, Honda, Toyota, and Kia — have long experience in building reliable, fuel-efficient cars. Demographically the high-end makers, notably BMW and Mercedes, increasingly dominate the luxury market, particularly among younger customers.

    Battle tested in world markets, these firms — and their counterparts in steel and other metals-related industries — are successful competitors and reliable employers. Overall, according to the U.S. Department of Commerce, foreign manufacturing firms, in autos and elsewhere, have proven far less susceptible to layoffs than their domestic competitors. They also tend to offer higher salaries on average than U.S.-based firms.

    Some observers, such as the American Prospect’s Harold Meyerson, decry these investments. He believes foreign firms, particularly from Europe, come to “slum.” America, as he puts it, is where Europeans now go “to get the job done cheap.”

    Meyerson points out, correctly, that these companies generally invest in mostly Southern “right to work” states in order to avoid entanglements with unions. They also avoid stricter environment controls in green-dominated juristictions such as California. Not surpsingly these plants are often seen as regressive at Berkeley salons or at AFL-CIO headquarters. But they may seem far more congenial in the historically poor backwaters of the Southeast , long lacking in steady, relatively well-paid and skilled work.

    When Toyota recently announced plans to establish a plant for the Prius near Tupelo, Miss., (birthplace of Elvis), one imagines few locals were singing the blues. Instead the new plant received 35,000 applications for 1,300 available spots.

    To be sure, these new jobs may not pay as well as top-grade UAW contracts, and a lack of unions could expose workers to undue management pressure. But in an economy where $8 hour jobs are king, an entry level job that involves learning technical skills and starts at $14 may appear akin to manna from heaven .

    Of course, some will denounce this “foreign” influence as pernicious or even neo-colonialist. But the overseas investment surge might also be seen as confirming, once again, that at least some places in the country remain fields of opportunity for people other than geeks, corporate rent-seekers or investment bankers.

    This piece originally appeared in Forbes.com.

    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.

    Manufacturing Industry photo by Bigstockphoto.com.

  • Is Energy the Last Good Issue for Republicans?

    With gas prices beginning their summer spike to what could be record highs, President Obama in recent days has gone out of his way to sound reassuring on energy, seeming to approve an oil pipeline to Oklahoma this week after earlier approving leases for drilling in Alaska. Yet few in the energy industry trust the administration’s commitment to expanding the nation’s conventional energy supplies given his strong ties to the powerful green movement, which opposes the fossil-fuel industry in a split that’s increasingly dividing the country by region, class, and culture.

    But Republicans, other than the increasingly irrelevant Newt Gingrich, have failed to capitalize on the potent issue, instead lending the president an unwitting assist by focusing the primary fight on vague economic plans and sex-related side issues like abortion, gay marriage, and contraception. The GOP may be winning over the College of Cardinals, but it is squandering its chance of gaining a majority in the Electoral College, holding the House, and taking the Senate.

    No single sector affects more people and industries than energy, and none is more deeply affected by the disposition of government. Energy divides the nation into two camps. On one side there are the regions and industries dependent on the development and use of energy. They include the increasingly expansive energy-producing region stretching from the Gulf Coast and the Great Plains to parts of Ohio, Pennsylvania, and the Appalachian range.

    The centers of energy growth, including areas stretching from the Gulf Coast through the Great Plains to the Canadian border, have generated the highest levels of job and income growth over the past decade (along with parasitic Washington, D.C.).

    Nine of the 11 fastest-growing job categories are related to energy production, according to an analysis by Economic Modeling Systems Inc. Energy jobs pay an average of $100,000 annually, about the same as software engineers earn in Silicon Valley.

    Perhaps more important politically, this bonanza is now spreading to historical battleground states Ohio, Pennsylvania, and Michigan. Long-depressed areas like western Pennsylvania are reversing decades of decline as new finds and advances in natural-gas drilling have opened up vast new stores of domestic energy. The new energy wealth has created new jobs, enriched property owners, and provided states with potential huge new sources of revenue.

    On the other side of the energy divide stand a handful of dense, mostly coastal metropolitan areas with either little in the way of energy resources or, in the case of California’s most affluent urban pockets, little interest in exploiting them. With a shrinking industrial base and less dependence on automobiles, these areas now constitute the political base for the both the Democratic Party and the growing green-industrial complex, which boasts strong ties to Silicon Valley’s well-heeled venture-capital “community” and their less celebrated, but even wealthier, Wall Street allies.

    In these places, the current fossil-energy boom is regarded less as a boon than as an environmental disaster in the making, a view captured in the unrelenting attack on shale development in the news pages of The New York Times and other outlets in broad sympathy with the Obama administration. New production of low-cost, low-emission natural gas also threatens the viability of politically preferred renewables such as solar and wind. But unlike fossil fuels, such “green” initiatives have created very few jobs; overall, the promise of “green jobs,” as even The New York Times has noted, has failed to live up to its hype.

    Given the success in the other energy states, California—with double-digit unemployment—might reconsider its policies, but this is unlikely. “I asked [Gov.] Jerry Brown about why California cannot come to grips with its huge hydrocarbon reserves,” John Hofmeister, a former president of Shell Oil’s American operations and a member of the U.S. Department of Energy’s Hydrogen and Fuel Cell Technical Advisory Committee, told me recently. “After all, this could turn around the state."

    Brown’s answer, according to Hofmeister: “This is not logic, it’s California. This is simply not going to happen here.’”

    But elsewhere in the U.S., new technologies such as hydraulic fracking and vertical drilling have vastly increased estimates of North America’s energy resources, particularly natural gas. By 2020, the United States, according to the consultancy PFC Energy, will surpass Russia and Saudi Arabia as the world’s leading oil and gas producer.

    As President Obama has acknowledged, this surge of production boasts some great economic benefits. American imports of raw petroleum have fallen from a high of 60 percent of the total to less than 46 percent. Overall, according to Rice University’s Amy Myers Jaffe, U.S. oil reserves now stand at more than 2 trillion barrels; Canada has slightly more. She pegs North America’s combined reserves at more than three times the total estimated reserves of the Middle East and North Africa.

    At the same time, energy exploration is sparking something of an industrial revival. The demand for new rigs, pipelines, and a series of new petrochemical facilities has created a burst of industrial production across much of the country. Steel mills, makers of earth-moving equipment, and construction suppliers all have benefited. A recent study by PricewaterhouseCoopers suggests shale gas could lead to the development of 1 million industrial jobs. Not surprisingly, some of the biggest backers of shale-gas exploration are prominent CEOs from industrial firms.

    Energy policy may also be critical for the future of the Great Lakes–based American auto industry. Despite expensive PR ventures like the electric Chevy Volt, the Big Three depend for profits largely on SUVs and trucks. High oil prices will only help their competitors from Japan, South Korea, and Germany, all of which are ramping up in the emerging Southeastern auto corridor. Rising oil prices could also raise the costs of food production, which relies heavily on energy-intensive fertilizers and machinery.

    Aware of the negative consequences for a still-weak recovery, President Obama has started to mount a defense for his energy policies. Last month he launched several preemptive strikes, claiming credit for rising U.S. production while ridiculing Republicans for their “drill, baby, drill” response to rising energy prices.

    Obama is correct in asserting that increases in domestic production will not solve the energy price issue overnight, or even in the near future. But it was disingenuous for him to then take credit for the current energy boom, which resulted largely from policies adopted during the Bush years, while Obama’s policies have, if anything, slowed exploration and development.

    It’s fairly clear that the president and his team—notably Energy Secretary Steven Chu and Interior Secretary Ken Salazar—are at best ambivalent about greater fossil-fuel development. Obama, for example, recently proposed cutting tax breaks and subsidies for the oil industry, which he estimated at $4 billion annually—a new expense for the companies that would in large part be passed on to consumers at the pump.

    This is not necessarily a bad thing in its own right, but along with the effective tax hike, Obama proposed doubling down on the much larger and, to date, far less productive giveaways to the green-industrial complex, which received $80 billion in loans and subsidies in the 2009 stimulus. According to various studies, including the Energy Information Agency, solar firms enjoy rates of subsidization per kilowatt hour at least five times those gained by fossil-fuel firms.

    If all energy subsidies were removed, the fossil-fuel industry likely could shrug off the hit, while the heavily subsidized green-industrial complex would markedly diminish. Yet even if Congress refuses to continue the green subsidies, it’s probable that administration regulators would find ways to slow fossil-fuel expansion in a second Obama term. Responding largely to the Democratic environmental lobby, they have already overruled the State Department to delay the Keystone XL pipeline from Canada. Plans for new multibillion-dollar petrochemical plants on the Gulf will make easy pickings for federal regulators from agencies now controlled by environmental zealots.

    “The energy states feel they are being persecuted for their good deeds,” says Eric Smith, director of the Tulane Energy Institute in New Orleans. “There is a sense there are people in the administration who would like this whole industry to go away.”

    In the short run, Obama’s political exposure in the energy wars is somewhat limited. Most of the big-producing states—Oklahoma, Wyoming, Utah, Texas, Louisiana, Alaska, and North Dakota—are unlikely to vote for him anyway. Nor does he have to worry about too much pressure from inside his party; Democratic ranks in Congress from energy-producing states have thinned considerably in recent years, removing contrary voices inside the party.

    A more dicey issue relates to contestable states like Ohio, Pennsylvania, and Michigan, where many see the energy boom as a source of economic recovery. To make their case in these and other swing states, Republicans first have to make energy the overall revival of the American economy—the key issue for this November’s election. If they insist on campaigning primarily as stolid defenders of rigid social values and election-year promises of painless tax cuts, they will have themselves to blame for their drubbing in November.

    This piece originally appeared in TheDailyBeast.

    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.

    Photo courtesy of BigStockPhoto.com.

  • Don’t Bet Against The (Single-Family) House

    Nothing more characterizes the current conventional wisdom than the demise of the single-family house. From pundits like Richard Florida to Wall Street investors, the thinking is that the future of America will be characterized increasingly by renters huddling together in small apartments, living the lifestyle of the hip and cool — just like they do in New York, San Francisco and other enlightened places.

    Many advising the housing industry now envisage a “radically different and high-rise” future, even though the volume of new multi-unit construction permits remains less than half the level of 2006. Yet with new permits at historically low levels as well for single-family houses, real estate investors, like the lemmings they so often resemble, are traipsing into the multi-family market with sometimes reckless abandon.

    Today the argument about the future of housing reminds me of the immortal line from Groucho Marx:Who are you going to believe, me or your lyin’ eyes? Start with the strong preference of the vast majority of Americans to live in detached houses rather than crowd into apartments. “Many things — government policies, tax structures, financing methods, home-ownership patterns, and availability of land — account for how people choose to live, but the most important factor is culture,” notes urban historian Witold Rybczynski.

    Homeownership and the single-family house, Rybczynski notes, rests on many fairly mundane things — desire for privacy, need to accommodate children and increasingly the needs of aging parents and underemployed adult children. Such considerations rarely enter the consciousness of urban planning professors, “smart growth” advocates and architectural aesthetes swooning over a high-density rental future.

    Just look at the numbers. Over the last decade— even as urban density has been embraced breathlessly by a largely uncritical media — close to 80% of all new households, according to the American Community Survey, chose to settle in single-family houses.

    Now, of course, we are told, it’s different. Yet over the past decade, vacancy rates rose the most in multi-unit housing, with an increase of 61%, rising from 10.7% in 2000 to 17.1% in 2010. The vacancy rate in detached housing also rose but at a slower rate, from 7.3% in 2000 to 10.7% in 2010, an increase of 48%. Attached housing  – such as townhouses –  posted the slightest increase in vacancies, from 8.4% in 2000 to 11.0% in 2010, an increase of 32%.

    The attractiveness of rental apartments may soon be peaking just in time for late investors to take a nice haircut. Rising rents, a byproduct of speculative buying of apartments, already are making mortgage payments a more affordable option in such key markets as Atlanta, Chicago, Miami, Phoenix and Las Vegas.

    Urbanist pundits often insist the rush to rental apartments will be sustained by demographic trends. One tired cliché suggest that empty nesters are chafing to leave their suburban homes to move into urban apartments. Yet, notes longtime senior housing consultant Joe Verdoon, both market analysis and the Census tells us the opposite: most older folks are either staying put, or, if they relocate, are moving further out from the urban core.

    The two other major drivers of demographic change — the millennial generation and immigrants — also seem to prefer suburban, single-family houses. Immigrants have been heading to the suburbs for a generation, so much so that the most diverse neighborhoods in the country now tend to be not in the urban core but the periphery. This is particularly true in Sunbelt cities, where immigrant enclaves tend to be in suburban areas away from the core.

    Millennials, the generation born between 1983 and 2003, are often described by urban boosters as unwilling to live in their parent’s suburban “McMansions.” Yet according to a survey by Frank Magid and Associates, a large plurality define their “ideal place to live” when they get older to be in the suburbs, even more than their boomer parents.

    Ninety-five million millennials will be entering the housing market in the next decade, and they will do much to shape the contours of the future housing market. Right now many millennials lack the wherewithal to either buy a house or pay the rent. But that doesn’t mean they will be anxious to stay tenants in small places as they gain some income, marry, start a family and simply begin to yearn for a somewhat more private, less harried life.

    In the meantime, many across the demographic spectrum are moving not away from but back to the house. One driver here is the shifting nature of households, which, for the first time in a century are actually getting larger. This is reflected in part by the growth of multi-generational households.

    This is widely believed to be a temporary blip caused by the recession, which clearly is contributing to the trend. But the move toward multigenerational housing has been going on for almost three decades. After having fallen from 24 percent in 1940 to barely 12 percent in 1980, the percentage topped over 16 percent before the 2008 recession took hold. In 2009, according to Pew Research Center, a record 51.4 million Americans live in this kind of household.

    Instead of fading into irrelevance, the single-family house seems to be accommodating more people than before. It is becoming, if you will, the modern equivalent of the farm homestead for the extended family, particularly in expensive markets such as California. This may be one of the reasons why suburbs — where more than half of owner-occupied homes are located — actually increased their share of growth in almost all American metropolitan areas through the last decade.

    Some companies, such as Pulte Homes and Lennar, are betting that the multi-generational home — not the rental apartment — may well be the next big thing in housing. These firms report that demand for this kind of product is particularly strong among immigrants and their children.

    Lennar  has already developed models — complete with separate entrances and kitchens for kids or grandparents — in Phoenix, Bakersfield, the Inland Empire area east of Los Angeles and San Diego, and is planning to extend the concept to other markets. “This kind of housing solves a lot of problems,” suggests Jeff Roos, Lennar’s regional president for the western U.S. “People are looking at ways to pool their resources, provide independent living for seniors and keeping the family together.”

    But much of the growth for multigenerational homes will come from an already aging base of over 130 million existing homes. An increasing number of these appear to being expanded to accommodate additional family members as well as home offices. Home improvement companies like Lowe’s and Home Depot already report a surge of sales servicing this market.

    A top Home Depot manager in California traced the rising sales in part to the decision of people to invest their money in an asset that at least they and their family members can live in. “We are having a great year ,” said the executive, who didn’t have permission to speak for attribution. “ I think people have decided that they cannot move so let’s fix up what we have.”

    These trends suggest that the widely predicted demise of the American single family home may be widely overstated. Instead, particularly as the economy improves, we may be witnessing its resurgence, albeit in a somewhat different form. Rather than listen to the pundits, perhaps it would be better to follow what’s before your eyes. Don’t give up the house.

    This piece originally appeared in Forbes.com.

    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.

    Photo by Bigstockphoto.com.

  • President Obama Courts Silicon Valley’s New Digital Aristocracy

    President Obama’s San Francisco fundraiser with the tech elites today, along with the upcoming IPO for Facebook, marks the emergence of a new, potentially dominant political force well on its way to surpassing Hollywood and even Wall Street as the business bulwark of the Obama Democratic Party.

    In 2008 the industry gave Obama more than $9 million, three times what it raised for any other politician; it was the first time the digerati outspent Hollywood. The numbers will surely go up this year.

    “The Facebook instant millionaires and billionaires are about all Democrats,” said Morley Winograd, a longtime California Democratic activist and chronicler of information-age politics. “There’s an enormous amount of power residing there—and it will only get greater.”

    Even when they’ve competed with and acted like more established power brokers, the digital ruling class are treated with kid gloves compared to other wealthy elites, rarely suffering the disdain aimed at amoral bankers and at Hollywood’s general venality. Instead, the creators of our iPhones, social networks and Twitter accounts are held up as tool makers and business titans. That esteem is most pronounced among millenials, 75 percent of whom use social media, more than twice the percentage for boomers, according to Pew. When asked what makes their generation “unique,” the most common answer to the open-ended question is technology.

    Those who will benefit most from Facebook and other IPOs resemble the “one percent” about as much as Wall Street.

    In effect, it’s OK to be in the “1 percent”—or even the .0001 percent—if you develop nifty devices and invest in green companies. "We live in a bubble, and I don’t mean a tech bubble or a valuation bubble. I mean a bubble as in our own little world," Google chairman Eric Schmidt recently told the San Francisco Chronicle. "And what a world it is: companies can’t hire people fast enough. Young people can work hard and make a fortune. Homes hold their value. Occupy Wall Street isn’t really something that comes up in daily discussion, because their issues are not our daily reality."

    For their part, the “Occupiers” who struggled mightily to shut down the blue-collar Port of Oakland seem to never have considered an action against the pampered techies at Facebook’s lavish campus.

    The new plutocrats are unburdened by the obligations that come with existing large institutions; with no union presence, they don’t have to worry about anxious retirees or redundant older workers. Green pet causes that align with their financial interests buy more cover from the left, while conservatives, who rarely see anything wrong with extreme wealth, seem somewhat unconscious about the political orientation of the emerging new elite. Ninety-two percent of Facebook executive donations so far this year went to Democrats. This exceeds even the rock-solid support the Democrats enjoy among more established firms like Google and Apple, where support for Democrats runs to the high 80s. Although its former CEO, Meg Whitman, ran as the Republican candidate for governor in 2010, 96 percent of eBay-associated donations went to Democrats. The Seattle area’s two top digital firms, Amazon and Microsoft make two thirds or more of their donations to Democrats.

    The Obama administration’s opposition to the anti-piracy bills SOPA and PIPA came despite intense lobbying for the bill by his party’s long-time allies in Hollywood. Whatever the bills’ failings, their defeat also formally introduced the new power of the digerati moguls and their millions of followers. The presence of Steve Jobs’s wife, Lauren, as Michelle Obama’s guest at the State of the Union speech further cemented the ever-closer ties between the valley’s upper echelon and the president’s party.

    In California, the alliance between progressive Democrats and high tech is palpable. The digital elite has been a consistent backer of Gov. Jerry Brown’s jihad on greenhouse gases, helping finance the campaign against a 2010 measure intended to reform state’s draconian and likely job-killing energy and land-use laws. Google has emerged both as a key backer of the state’s climate-change politics and sought to profit by investing nearly a billion dollars in renewable-energy companies. These firms in turn depend on the state’s strict mandates on utilities to use “green” electricity for their revenues. It’s no coincidence that prominent valley VCs have been particularly active in alternative-energy firms such as Solyndra.

    Brown and the Democratic Party increasingly have come to regard these companies as a potential source of fiscal salvation for the perennial cash-short state. As the Golden State has banked on the valley, the tech firms have become ever more indispensable and now are even dipping their toes in the grubby waters of municipal politics, helping finance the campaign of San Francisco Mayor Ed Lee—who generously concocted new tax breaks for local firms such as Twitter and Zynga.

    The leftward shift by tech firms is a fairly recent development. In the 1970s and 1980s, the formative period for Silicon Valley, the area was politically contested. Valley constituencies routinely sent to Congress moderate Republicans like Pete McCloskey, Ed Zschau, and Tom Campbell. Today the GOP is virtually absent from the valley at all levels of government.

    Some old-line companies, like Hewlett-Packard and Intel, still tend to be fairly evenhanded in their political donations, but they are increasingly rare. Long-time valley maven Leslie Parks explains that the shift came as the Valley’s economy changed. In the 1980s and 1990s—the area’s greatest period of growth—its roots stood solidly in high-tech manufacturing. Now it focuses almost exclusively on product design and information: software, search, and social media. Over the past decade the San Jose area lost one third of its industrial workforce while the neighboring San Francisco region lost some 40 percent—the largest consistent loser among the nation’s 51 metropolitan areas.

    High-tech firms once concerned themselves with many of the same things as other manufacturing companies. They worried about electricity rates, obtrusive environmental legislation, high housing prices, and dysfunctional public education. Many naturally supported Republicans, or business-oriented Democrats.

    But as tech separated from industry, the valley moved leftward.

    Today’s digital aristocrats manufacture virtually nothing here; anything made in volume is produced outside California and usually out of the country. Software-based firms don’t worry about energy costs, since they can simply place their heavy user server farms in places like the Pacific Northwest with low electricity rates. They do not use much in the way of toxic chemicals or groundwater, making it easier to avoid scrutiny and harassment from California’s hyper-aggressive environmental regulators. Because they rely on an increasingly narrow band of highly educated employees from elite schools, the secular decline of the state’s higher education system hardly impacts them. And as many of their employees are young and tend to buy houses after collecting the spoils of an IPO, even high housing costs and poor public K-12 education don’t matter much.

    The growing diversity of the valley has also helped the Democrats. Although relatively few Latinos or African-Americans work in the new companies, new immigrants from Asia and the Middle East and their offspring abound. “You had a big change in diversity, and let’s face it the Republicans do not do well with diversity,” said Parks, who is Japanese-American. “The Democrats, particularly Obama, recognized appealing to these people was a necessity.”

    Many who celebrate this emerging power elite are still slow to recognize that they are in these company’s sights. As we become more dependent on internet based news and entertainment, cultural power is migrating away from New York publishers and Los Angeles studios towards Palo Alto and Menlo Park. Old-line media firms such as newspapers, book companies and the major networks may find themselves overmatched.

    This growing power may do more to concentrate economic power than any development since the Second World War. With their stockpile of personal data on their hundreds of millions of users, firms like Google and Facebook could prove the biggest threat to privacy since Big Brother. As Jason Lanier, a scholar-at-large at Microsoft Research, noted in a recent New York Times op-ed piece, the same companies that led the fight to keep the Internet “free” want to sell hundreds of billions of dollars in advertising built from that free, user-provided information.

    While the old valley empowered people by supplying technology, says Chicago law professor Lori Andrews, social-media firms instead leverage our personal information into fodder for not just advertisers but people reviewing job applications, medical records, and more.

    What’s more, the dominant firms are rapidly becoming oligopolies. In the old days, valley companies battled over everything from semiconductor chips and disk drives to servers and operating systems. In contrast, today’s digital industry tends to gravitate to the best-financed (usually by venture capital) and most well-connected companies. Microsoft, for example, still controls 90 percent of the operating-system-software industry; Facebook is likely to continue with a 60 percent to 70 percent share of the social-media marketplace. Google enjoys a higher than 80 percent share in search.

    This is a degree of control that exists in few older industries. Like the railroads of the old robber barons, those few firms who control the limited number of digital platforms can limit the profitability of smaller would-be competitors—and could end up slowing the rate of innovation in order to maintain their own positions. They may wear T-shirts to work, but the tycoons of Silicon Valley are, in some respects, J.P. Morgan’s true heirs.

    Populism may now be de rigeur inside of the Democratic Party, but the world being created by the new digital haute bourgeoise is anything but social democratic. Parks notes that the lower end of the valley economy, like janitors or food-service workers, generally labor for flinty-eyed outside contractors so they share as little as possible of the wealth collected by higher-skilled employees.

    Even Silicon Valley’s geography is increasingly unfriendly to the mass middle class, much less the aspiring working class. Due largely to strict land-use regulations, median housing costs, even adjusted for income, are among the highest in the nation, more than twice as high as those in places like Raleigh, Salt Lake City, Houston. or Dallas. With a 2,300-square-foot home in Palo Alto going for nearly $1.8 million, the digital heartland is largely off limits for most of us.

    Those who will benefit most from Facebook and other IPOs resemble the “1 percent” about as much as Wall Street. They may see themselves as “progressive,” but they create few broad-based opportunities for members of the middle and working class. A bit of their wealth may trickle down to Democratic politicians, but the rest of us, as dependent as we have become on their technology, have reaped little financial benefit from them. Whatever the value of their creative efforts, the new digital aristocracy’s political ascendency threatens both the populist roots of the Democratic Party and perhaps the delicate social balance of our Republic as well.

    This piece originally appeared in TheDailyBeast.

    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.

    Official White House Photo by Pete Souza.

  • Sex, Singles And The Presidency

    By all accounts both President Barack Obama and his likely challenger, former Massachusetts Gov. Mitt Romney, are ideal family men, devoted to their spouses and their children. But support for the two men could not be more different in terms of the electorate’s marriage and family status.

    An analysis comparing the results of the 2008 election and the most recent Gallup surveys with data by demographer Wendell Cox   shows a remarkable correlation between the states and regions with the highest proportion of childless women under 45 –  the best indicator of offspring-free households — and the propensity to vote Democratic. Overall, the most child-free regions were nearly 85% more likely to vote for Obama in 2008. And according to the most recent Gallup survey, they are  similarly inclined to vote Democratic today.

    At the top of the list, with 80% of its women under 45 without children, stands the rock-solid blue District of Columbia. Just behind that taxpayer-financed paradise the six states with the highest percentages — Massachusetts, New York, Rhode Island, Hawaii, Vermont and California — also skew Democratic.  In each of these states the percentage of childless women exceeds 55%.

    The highest percentage of offspring-free women under 45 can be seen as well  in such Democratic metropolitan areas as Boston, San Francisco, Los Angeles, San Diego and New York In each of these metropolitan areas  the percentage of childless woman reached a minimum of 60%  well above the national average of 53%. In the urban cores of these regions the percentage can approach Washington’s 80% figure. To a large extent, childlessness correlates with high density and a less affordable housing stock.

    The top child-bearing regions are almost all deep-red Republican, both in 2008 as well as today. The top five child-bearing states — Mississippi, Idaho, Wyoming , Oklahoma and Arkansas — all generally tilt toward the GOP. So do the metropolitan areas that have the lowest percentages of childless women:  the Texas metros of Dallas-Fort Worth, San Antonio and Houston, Mormon stronghold Salt Lake City and Memphis.  The next five include right-leaning Indianapolis, Charlotte, Louisville, Riverside-San Bernardino and Oklahoma City.

    These numbers would be more striking if not for the somewhat higher propensity for child-bearing among African-Americans and Latinos, two core Democratic constituencies. As other surveys have shown, Republicans gains in recent years have come largely  from married white families. In contrast, Democrats have lost the support of married people overall  since 2008, even while gaining among the unmarried. If Republicans can lose their obsession with opposing homosexual families, they might even garner additional support.

    A growing part of the Democratic base — aside from ethnic minorities — consists of white, childless couples and, in particular, single women. There’s much good news for Democrats here. According to the pro-Democratic advocacy group Women’s Voices, Women Vote, almost two-thirds of this demographic group voted for John Kerrey in 2004; in 2008 they went for Obama by nearly 70%. In 2010, a generally unfavorable political climate for Democrats, unmarried women helped power Democratic victories, particularly in Colorado and California, in the latter case against female Republican candidates.

    Demographically, at least in the short and even medium term, betting of singles and the childless couples seems like a no-brainer. In the past 30 years the percentage of women aged 40 to 44 who have never had children nearly doubled to 19%. At the same time singletons of both sexes are on the rise, numbering over 31 million strong today, up from 27 million in 2000,a growth rate nearly double that of the overall population.

    The increasing role of the childless may already be shifting the Democratic Party toward the kind of post-familalistic secularism generally associated with Europe or parts of East Asia.  This could partly explain why the Obama Administration has been so willing to challenge the Catholic Church — a traditional home to many working class Democrats — on the issue of offering contraception to its employees. Simply put, in Democratic calculations, secular singletons may now outweigh religious Catholic Democrats.

    The importance of singlehood and childlessness is amplified by location. The greatest bastions of non-families are found in the centers of the country’s media, cultural and intellectual life. Single households already constitute a majority in Manhattan and Washington, and they are heading in that direction in Denver, Seattle and San Francisco.

    The growing self-confidence of these post-familial constituencies is evident  in recent articles and books hailing not only the legitimacy but even the preference of this lifestyle option. Kate Bollick’s much celebrated and well-argued portrayal in the Atlantic of attractive matchless, and childless, 40-something females celebrates the coming of age of this new perspective on family life.

    Bollick , citing the degraded condition of today’s males, openly embraces “the end of traditional marriage as an ideal.”  One of her heroines, California psychologist Bella DePaulo, dismisses the traditional family unit as a kind of mental malady she labels “matrimania.” Oh well, there goes the primary basis for four thousand years of civilization.

    The Atlantic piece serves as a kind manifesto for this key emerging  Democratic constituency. But it’s not just single women now swarming into the Democratic Party. NYU Professor Eric Klineberg’s recent ode to singleness in the New York Times follows a similar narrative, but has room for left-leaning male singletons as well. This  trend is even more pronounced in demographically disintegrating  Europe, a fact that only increases its appeal to the sophisticated denizens of the single zone.

    Are there any risks to Democrats — and advantages to Republicans — in this new post-familial tilt? Author and New America fellow Phil Longman argues that in the long run  the  “greater fertility of conservative segments of society” could allow the palpably brain-dead GOP to inherit the country. Childless singletons may be riding high now, he writes, but as non-breeders their influence ends with their own lifespans.

    To win the future, according Democratic activists and millennial chroniclers Morley Winograd and Mike Hais, Democrats must all appeal to the next generation of families. Many of today’s childless millennials are still under 30 and plan to have kids, according to Hais and Winograd’s survey research. Reflecting their own experience with divorce as children, 50% consider being a good parent their highest priority in life. A strong plurality also see themselves ending up in the suburbs.

    That means Democrats could pay a big price for disdaining homemakers, the often unaesthetic chores of child-raising and particularly suburbia, because that’s precisely the place where many of today’s urban millennials will likely end up in the next decade.

    To address the future millennials, Democrats don’t need to adopt the often Medievalist views of their Republican rivals. But they will have to craft a message that appeals to  a demographic that looks, at least somewhat, like the current First Family.

    This piece originally appeared in Forbes.com.

    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.

    Official White House Photo by Lawrence Jackson.