New Geography

Author: Joel Kotkin

  • Here Comes Barack Cameron?

    President Bill Clinton and British Prime Minister Tony Blair were so “like-minded,” according to one Los Angeles Times writer, that they brought new meaning to the U.S. and England’s “special relationship.” Blair’s later embrace of George W. Bush, however, was less satisfying, leading to widespread ridicule that the PM was the Texan’s favorite “lap dog.”

    President Barack Obama shares little of his predecessors’ Anglophilia; he even unceremoniously returned Blair’s gift of a Winston Churchill bust loaned to Bush after 9-11. Yet however much Obama may detest the old Tory imperialist, he might find in Blair’s successor David Cameron a role model for his troubled administration.

    On the surface, the aristocratic, well-heeled Cameron, the son of a wealthy stockbroker and husband to an heiress (he is now estimated to be worth 30 million pounds), might seem a poor match for the self-made community organizer from Chicago. But Cameron’s philosophy — which melds liberal social and environmental concerns with fiscal conservatism — could prove useful to the U.S. president, particularly since Obama’s initial plan (massive expansion of the federal welfare state) has been made moot by the recent election. Cameron’s “One Nation” Toryism offers a model of governmental activism while accommodating anti-deficit sentiment that has grown in both countries.

    But Cameron’s politics share more with Obama’s than meets the eye.  Like the Obama, he is articulate, attractive and young — at 44 he is five years younger than the U.S. president. And he is determined to reshape his party’s image. Cameron represents a break from what we might consider rightist conservatism. Unlike Margaret Thatcher, Cameron reflects gentry, not middle-class, conservative values; much like Obama he appeals more to the well-educated segments of society. Enterprise, the breaking down of class structures and expanding opportunity and ownership do not rank among Cameron’s priorities. The Telegraph’s Simon Heffer suggests that Cameron shares some similarities with Harold MacMillan, who sought to put a more human face of Britain’s notoriously rigid class system rather than upending it entirely.

    Cameron’s Conservatives, locked in a governing alliance with the Liberal Democrats, also eschew the unattractive views, common on the continental right, about immigrants or minorities. These enlightened social attitudes reflect the class consensus of the upper echelons of post-industrial Britain — much as Obama’s social views resonate with the U.S.’ academic, media and financial sectors.

    The big banks represent the most important gentry constituency on both sides of the Atlantic. In Washington the new Chief of Staff, crony capitalist extraordinaire Bill Daley, will strongly reflect their interests. In both countries, the financial services industry has benefited more from government largesse and monetary policy than any other sector. Less than three years from helping sink the world economy, firms in the City in London and Wall Street in New York are minting money and handing out lush bonuses. In London, developers are considering building new office complexes. The restaurants and fancy shops, from the City and Mayfair to the West End, like their counterparts in swank parts of Manhattan, are thriving.

    This prosperity, of course, contrasts dramatically with conditions outside the financial sector. Like the American industrial heartland, areas outside the largely prosperous southeastern U.K. are struggling. Some of these areas, notes Conservative MP Mark Field, resemble “Stalinist Russia” in their near total dependence on government spending. Any significant cutbacks in government expenditures will hit these areas hardest.

    These areas would benefit most from expansive, pro-growth policies that encourage building new plants, research facilities and business services outside London’s swanky precincts. But Cameron, like Obama, seems more interested in promoting “hip” urbanism focused on high-end services, media and cultural exports than in rebuilding Britain’s declining middle-class job base.

    Cameron’s political “green act,” as Heffer calls it, reflects aristocratic attitudes and a keen reading of “focus groups.” Unlike the current crop of conservatives in Washington, Cameron’s Conservatives embrace the global warming agenda about as fully as their Labour predecessors. They embrace all the policies — high-speed rail, pro-density planning policies, massive subsidization of renewable fuel — that remain critical Obama policies.

    Cameron’s Conservatives have even sought to limit the construction of new runways at Heathrow, the country’s main airport, in order to stop what the government has called “binge flying.” Of course, this usually refers to middle-class people taking cheap vacations on low-cost airlines. After all, much higher airfares won’t much affect the financial sector, which can easily absorb them.

    Green land-use policy is also useful to the City, notes the pro-development group Audacity, since it serves to constrict supply and bolster the value of  mortgages by keeping prices artificially high. The U.K. suffers a perennial shortage of homes that already has reached 1 million, a number likely to double in the following decade. No surprise then that British property prices, compared to incomes, are among the highest in the world, particularly in and around London.

    The City, like Wall Street and Silicon Valley, hopes to make a killing on “cap and trade” as well as a host of renewable energy schemes. For Obama, who is anxious to repair relations with big business, green politics represents a potential windfall, bringing him accolades from both the financial hegemons and parts of his enviro-focused “progressive” base.

    Yet a combined policy of fiscal austerity and green regulations could also suppress growth across the broader economy outside the high-end financial and service sector. Opposition to new fossil fuel plants, opting instead for expensive and highly subsidized wind-energy could double U.K. energy by 2030. Faced with competition from developing countries willing to burn coal, oil and perhaps anything flammable, and lacking the hydro-resources of Scandinavia or the nuclear industry of France, British the U.K. will face ever great obstacles in the global marketplace

    Overall Cameron’s policies, notes author James Heartfield, will likely intensify class barriers in Britain. Over this cold, snowy winter as many as 25,000 people have died from exposure, in large part because they cannot afford higher energy bills. Millions of homes, schools and hospitals face winter fuel-rationing.

    Similarly, the Tory resistance to building new suburban housing will not only deprive people of the option of a decent, low-density lifestyle, but it will also strip jobs from the historically well-paying blue-collar construction trades. Under current policies, notes one recent study, prospective homeowners will face “mortgage misery” for the rest of the decade.

    Of course, these policies present political risks.  Conservative poll ratings are up slightly, but Cameron’s coalition partners, the Liberal Democrats, who appeal more to centrist voters, are fading rapidly. A year after its resounding defeat, Labour has surged to a slight lead in the polls.

    Yet given the current reality, a Cameron-like embrace of austerity coupled with green policies represents a positive strategy for the Obama Administration. Just as Cameron has sought to redefine conservativism with a humane face, Obama could concoct a modern progressivism that is both green and fiscally responsible.  By 2012, the radical community organizer could well morph into an entirely new persona: Barack Cameron.

    This piece originally appeared in Forbes.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and an adjunct fellow of the Legatum Institute in London. 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 Wikipedia Commons

  • The Heartland Rises

    The change in congressional power this week is more than an ideological shift. It ushers in a revival in the political influence of the nation’s heartland, as well as the South.

    This contrasts dramatically with the last Congress. Virtually its entire leadership — from former House Speaker Nancy Pelosi (D-Calif.) on down — represented either the urban core or affluent, close-in suburbs of large metropolitan areas. Powerful old lions like Reps. Charles Rangel (D-N.Y.) of Harlem, Henry Waxman (D-Calif.) of Los Angeles and Barney Frank (D-Mass.) of Newton, an affluent, close-in Boston suburb, roamed. The Senate was led by Sen. Harry Reid (D-Nev.), who loyally services Las Vegas casino interests while his lieutenant, Sen. Chuck Schumer (D-N.Y.), is now the top Democratic satrap of Wall Street.

    The old Senate tandem remains in place — but with greatly reduced influence. Many remaining Democrats, particularly those from the heartland, now live in justifiable fear for their political lives. But the most radical shifts in political geography are in the House.

    The new House leaders are, for the most part, from small towns, suburbs and interior cities. Most GOP pickups came from precisely these regions — particularly in the South and Midwest.

    The new speaker, Rep. John Boehner (R-Ohio), for example, represents a southern Ohio district that includes some Cincinnati suburbs. Rep. Eric Cantor (R-Va.), the majority leader, comes from suburbs west of Richmond. Rep. Paul Ryan (R-Wis.), chairman of the Budget Committee, hails from Janesville (population: 63,000).

    Power is moving within state delegations. Before the elections, California’s most influential House members hailed from coastal districts. In contrast, Rep. Kevin McCarthy, the new majority whip, represents Bakersfield, an oil-rich, largely agricultural area known as “Little Texas” — a far cry from the urbanity of Pelosi’s San Francisco.

    This change in geography also suggests a shift in the economic balance of power. The old Congress owed its allegiance largely to the “social-industrial” complex around Washington, Wall Street, public-sector unions, large universities and the emergent, highly subsidized alternative-energy industry. In contrast, the new House leaders largely represent districts tied to more traditional energy development, manufacturing and agriculture.

    The urban-centered environmental movement’s much-hyped talk of “green jobs,” so popular in Obama-dominated Washington, is now likely to be supplanted by a concern with the more than 700,000 jobs directly related to fossil fuel production. Greater emphasis may be placed on ensuring that electric power rates are low enough to keep U.S. industry competitive.

    The Obama administration’s land-use policies will also be forced to shift. Sums lavished on “smart growth” grants to regions, high-speed rail and new light-rail transit are likely to face tough obstacles in this Congress.

    Ken Orski, a former senior Transportation Department official and longtime observer of Washington land-use and transportation policy, said that no member of the GOP majority on the House Transportation and Infrastructure Committee comes from a big-city, transit-oriented district. The new committee, dominated by members from rural, suburban and interior smaller cities, represents areas that rely little on mass transit. These members are expected to steer money back to the roads and bridges their constituents rely on.

    Even more important are pending changes in energy policy. Many conservatives disdain what they consider “green pork” — subsidies for renewable fuels like solar and wind as well as the electric car and battery industry. Many firms involved in renewable fuels, already struggling to compete with cheap natural gas, could be driven out of business without continued federal nurturing.

    Another top priority for GOP leaders — and perhaps some energy-state Democrats — may be to choke off funding for the Environmental Protection Agency’s announced new regulations for greenhouse gases. Three out of four jobs in the oil and gas extraction industry are in GOP-dominated Texas, Oklahoma and Louisiana. California’s still-large oil industry includes many who work in the state’s increasingly Republican-leaning interior.

    Similarly, more than two-thirds of the nation’s coal mines, a prime EPA target, are in just three, increasingly red-leaning states — Kentucky, Pennsylvania and West Virginia, according to the Energy Information Administration.

    Yet urban areas can expect some benefits from this Congress. The recent extension of the Bush tax cuts largely benefits wealthy professionals, who cluster in a handful of expensive, liberal-oriented cities and their leafy, affluent suburbs. San Francisco, Boston and Manhattan liberals may groan about “breaks” for the rich, but many may be cursing the GOP all the way to the bank.

    Over time, the new emphasis on fiscal austerity could also play to Wall Street’s advantage — probably the last intention of most tea party activists. Reductions in public borrowing should drive more money into the private economy. This approach, adopted by Conservative British Prime Minister David Cameron, has helped create a smart recovery for London — even as the rest of Britain suffers from government cutbacks.

    The drive for austerity could also threaten traditional heartland staples like agricultural price supports and military spending. Major defense budget reductions, a necessity for any credible cut, could prove painful for military-oriented, red states like Virginia, Arizona, Alabama and Texas.

    This new regional balance of power poses a profound existential question for Democrats in states like California, New York and Illinois. The unlikely possibility of any future bailout for states or cities should help concentrate their minds on things like cutting spending and restoring their ability to create new jobs.

    Overall, it may be better for all regions to have a divided government. With President Barack Obama still in charge of the executive branch, we are not likely to see a repeat of the Bush-era excesses that favored traditional energy companies, suburban housing speculation and agribusiness.

    Optimistically, we may now see a canceling out of both parties’ regional tilts, spurring greater competition among localities for both investment and human talent. This could ultimately benefit the entire economy — taxpayers and communities — shedding an enlightened pragmatism on the current dreary landscape that is U.S. politics.

    This article first appeared at Politico.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and an adjunct fellow of the Legatum Institute in London. 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 Smaku

  • California’s Third Brown Era

    Jerry Brown’s no-frills inauguration today as California governor will make headlines, but the meager celebration also marks the restoration of one of the country’s most illustrious political families. Save the Kennedys of Massachusetts no clan has dominated the political life of a major state in modern times than the Browns of California. A member of this old California Irish clan has been in statewide office for most of the past half century; by the end of Jerry Brown’s new term, his third, the family will have inhabited the California chief executive office for a remarkable two full decades since 1958.

    Brown, at 72 the oldest governor in state history, may well determine the final legacy of this remarkable family. His biggest challenge will be to reverse the state’s long-term secular decline — a stark contrast to the heady days of the first Brown era, presided over by paterfamilias Edmund “Pat” Brown.

    Pat Brown was a committed progressive who actually believed in both social and economic progress. He did not focus on re-distributing wealth or expanding bureaucratic controls; his priority was to use government to help generate greater opportunities for Californians.

    Under Pat roughly 20% of the state budget was devoted to capital outlays. He expanded wealth creating infrastructure such as freeways and the State Water Project, which created vast expanses of new, highly fertile farmland. He also increased the state’s parklands so that middle-class Californians could enjoy the state’s unmatched natural beauty.

    Pat, as historian Kevin Starr notes, also transformed California into “a mecca for education.” Inexpensive and quality training — from the elite university to the extensive network of community colleges — fostered high-tech industries across the state. Under Pat Brown, California’s share of the nation’s employment rose from some 8% to 10% as its GDP swelled by a similar percent.

    Pat, not surprisingly, remains an iconic figure for many older Californians. What ended his career was not so much his embrace of big government — although its growing scope and cost concerned many voters  – but backlash against the 1964 “free speech” riots at Berkeley and the far deadlier civil unrest in Watts the following year.  Running as the candidate of law and order, as well as fiscal conservatism, Ronald Reagan in 1966 defeated Brown’s bid for a third term.

    Yet so great was the reservoir of affection for the Pat Brown that in 1974 the voters elected his 36-year-old son as Reagan’s successor. As the late Joe Cerrell, a key operative for both Browns, put it: “If he had run as Edmund G. Green, he wouldn’t have bet on his running in the top 14.”

    Jerry Brown turned out to be of a very different political hue than his father. Sometimes he sounded more anti-government even than Reagan. He disdained his father’s traditional focus on   infrastructure spending and instead preached about amore environmentally friendly “era of limits.”  Brown cut the percentage of spending on such capital improvements from roughly 10% of state spending under Reagan to barely 5%, where it remains mired today.

    Arguably Brown’s biggest mistake was signing legislation in 1978 that allowed collective bargaining for public employee unions. This opened the door for a power grab that eventually drove the state toward semi-permanent penury. Brown’s early embrace of environmentalism also set a pattern of state green engineering that, although clearly avant garde , also tipped the state’s competitive edge.

    Brown, however, also showed a pragmatic side.   Although initially opposed to Howard Jarvis’ 1978 Proposition 13 limits on property taxes, he later embraced it  so enthusiastically that the casual voter might have mistaken him for its author. In his second term Brown also evolved into an avid cheerleader for the state’s burgeoning high-tech industry.

    He also had good fortune to govern California at a time when surging Japanese investment, the high tech boom and, perhaps most important of all, the military buildup accelerated by the 1979 Soviet invasion of Afghanistan generated a remarkable economic boom. Between 1976 and 1980 aerospace and electronics-related employment jumped by a third. California’s share of the nation’s GDP, population and jobs rose steadily, while job growth surpassed the national average.

    The third Brown era, sadly, starts with far less favorable prospects. The state’s share of the nation’s economy and employment has been shrinking for at least a decade. Per capita income has fallen in comparison with the national average by nearly 20%. Once the nation’s high tech wunderkind, California’s share of new high-tech jobs has fallen to a fraction of the national average, while other states, notably Texas, Virginia, Utah and Washington have surged ahead.

    Things have been toughest on the state’s working class. Despite an ever-expanding welfare state, California’s 36 million people suffer a rate of poverty at least one-third higher than the national average when adjusted for cost of living.  Unemployment now is higher than any major state outside Michigan.

    Meanwhile, even as state social spending has surged, reminders of the heroic period — from the state system of higher education to the power, water and freeway systems — have fallen into disrepair. The state’s finances are in even worse shape. Under the feckless Arnold Schwarzenegger, state debt jumped from $34 billion to $88 billion. California now spends twice as much on servicing its interest (more than $6 billion annually) than on the University of California.

    Brown himself recently conceded that the state budget deficit may widen to $28 billion over the next 18 months while the state’s Legislative Analyst’s Office predicts that $20 billion deficits are likely to persist at least through 2016. Not surprisingly, once golden California suffers consistently near the worst debt rating of any state. And things are not likely to turn around quickly: State and local tax revenues in the third quarter of last year rose a paltry 0.6% compared with a 5.2 % gain nationwide.

    Brown’s proven taste for austerity could make him far more effective at addressing the state fiscal crisis than the clueless Terminator. His biggest problem on fiscal matters, one close advisor confided, may lie with his own Democrats in the legislature, many of whom are little more than satraps of the public employee interests.

    Brown’s support for the state’s increasingly draconian green polices may prove more problematic.  As Attorney General, Brown played the bully in enforcing radical green measures that seek to limit developments — industrial and residential — suspected of creating greenhouses gases. Brown suggested during the campaign that such policies would help create an estimated 500,000 green jobs, but few outside the environmental lobby take this seriously. Brownsupporter Tom Hayden points out that these jobs can only be created by higher energy prices and considerable tax increases — not exactly the elixir for an already weak economy.

    More troubling still, Brown, the Democratic leadership and their media supporters continue to deny that “progressive” policies have created  ”a hostile business climate.” Until they wake up to the reality of the state’s dire economic situation, little in the way of serious reform can be expected.

    To succeed, Brown must move beyond delusions and rediscover the pro-business pragmatism that characterized his second gubernatorial term. If not, we can expect the final obliteration of Pat Brown’s great  legacy of pro-growth progressivism, in no small part due to the misjudgments of his son and heir.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and an adjunct fellow of the Legatum Institute in London. 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 Thomas Hawk

  • The Poverty Of Ambition: Why The West Is Losing To China And India – The New World Order

    The last 10 years have been the worst for Western civilization since the 1930s. At the onset of the new millennium North America, Europe and Oceania stood at the cutting edge of the future, with new technologies and a lion’s share of the world’s GDP.  At its end, most of these economies limped, while economic power – and all the influence it can buy politically – had shifted to China, India and other developing countries.

    This past decade China’s economic growth rate, at 10% per annum, grew to five times that U.S.; the gap was even more disparate between China and the slower-growing  E.U.,  Yet periods of slow economic growth occur throughout history — recall the 1970s — and economies recover. The bigger problem facing Western countries, then, is a metaphysical one — a malady that the British writer Austin Williams has dubbed “the poverty of ambition.”

    This lack of ambition plagues virtually every Western country. The ability to act has become shackled by a profound pessimism that according to a recent Gallup survey contrasts with the optimism found not only in rising states like China, India and Brazil, but also deeply impoverished places like Bangladesh.

    Attitudes have consequences. The rising stars of the non-Western world — from the United Arab Emirates to Singapore and China — are building cities with startling new architecture and bold infrastructure. Their entrepreneurs are expanding their operations across the planet.

    Of course, you can chortle at the outrageous overbuilding in places like Dubai, but the Western world might do better to appreciate the scope of their ambition. Indeed, for years New York’s Empire State building, erected  during the Depression, was derided as  ”the empty state building.” Today it’s visionary developers like Iraqi-born Istabraq Janabi who are planning unlikely  new structures even  in  troubled places like Ramadi, Iraq.

    The difference in ambition can be seen clearly at airports, which now serve as the entry halls of the global economy. A traveler to John F. Kennedy Airport, Heathrow, Charles De Gualle LAX or Dulles passes through decayed remnants of fading late 20th century buildings and technology. In contrast, airports in Dubai, Hong Kong and Singapore offer clean, ultra-modern facilities with often impressive design.

    The West’s retreat from space exploration further underscores its metaphysical poverty. Today, Europe and the U.S., the world’s historic leader in the field, are cutting back on plans to explore the cosmos, which has included a manned operation to the moon. President Obama wants NASA to focus more on issues regarding climate change instead. In contrast, the rising countries of Asia, notably China and India, have begun plans for manned flights to the moon and beyond.

    This divergence is not about resources; it is about the growing conviction in the West that moving forward is an illusion or, as the British academic John Gray’s puts it, “progress is a myth.”  Victorian empire-makers and intellectuals, like their republican American successors, believed perhaps naively in the potential of humanity, economic and technological progress. Today our intellectual and political classes have gone to the other extreme.

    The West’s politics are in the grips of two profoundly retrograde mentalities. One, a small-minded conservatism, harks back to the “golden” age of the 1950s when Western power faced only a flawed Soviet challenge. The idealistic but flawed commitment to imposing democracy by force of the Bush years has faded; it has been replaced by an obsession with taming a bloated public sector. While this focus may be justified, it is fundamentally more reactive than proscriptive.

    The Left, which once portrayed itself as the bastion of scientific rationalism, increasingly embraces neo-druidism, a secular form of nature worship. This tendency’s roots can be traced back to the “Limits to Growth” ideology of the early 1970s which projected, mostly mistakenly, that the planet was about to run out of everything from food to oil. Concerns over climate change have transformed this dismal sentiment into a theology, with carbon emissions treated as a form of original sin.

    The anti-progress nature of the new Left is unmistakable. Rather than seek ways to control climate change, suggests The Guardian’s George Monbiot, environmentalism is engaged in “a battle to redefine humanity.” Monbiot believes the era of economic growth needs to come to an inevitable denouement; that “the age of heroism” will be followed by the decline of the “expanders” and the rise of the “restrainers.”

    Europe, particularly the U.K., suffers acutely from metaphysical angst.  Once touted as the new great power by its leaders and their American claque, the E.U. is quickly dissolving along cultural and historical lines; this is especially evident in the division between the  resilient countries of the north (something like the Hansa trading states of the late Middle Ages) and the weaker countries along the periphery. For the most part, Europe no longer seems capable of doing much more than finding ways to control an unaffordable welfare state without tearing about its social net. The once cherished notion of a multi-racial “new” Europe largely has dissolved as immigration has devolved from a source of demographic and cultural salvation to a widely perceived threat to the E.U.’s economic and social health as well as security.

    Such defeatism usually has less success in the United States. But America’s “progressive” left increasingly resembles its European cousins.  Obama’s science advisor, John Holdren, has been a long-time advocate of the idea of “de-development,” the purposeful slowing of growth in advanced countries in order to protect the environment. The critical infrastructure needed to accommodate upward of another  100 million Americans — new dams in the west, intelligent development of our vast natural gas reserves and building new cities, airports and ports  – are not at the center of either party’s platforms. These could be financed largely with private sources, given the right incentives.

    Fortunately the West’s decline is not at inevitable. China, India, Vietnam, Brazil, South Africa all deserve their day in the sun, but this does not mean that Americans or Europeans should cower in the shadows. Western countries still possess much of the world’s cutting-edge technology and leading companies; the combined GDP for the E.U., North America and Oceania stands at over $33 trillion, almost five times that of India and China together.

    More important still, the political and cultural institutions of the West — with their liberal values — represent the best hope for a stable world of self-governing peoples. Does anyone in the West, particularly the progressives in the media and academia, really want a world run by Chinese despotism?

    The current financial crisis should serve as both a warning and a spur for a new focus on economic expansion. But this can only occur if the West can restore its belief in its future. This does not necessitate a return to the colonial attitudes of the past, but rather a keener appreciation of our unique human, physical and political advantages.

    Only the United States – by far the richest, largest and most populous Western nation — can lead such a revival. For one thing, the U.S. remains the world’s leading immigrant magnet and most diverse large country, all of which makes it the natural center of an evolving global society. Although immigrants pose some serious issues, University of Chicago scholar Tito Sananji notes that the U.S., along with Canada and Australia, seems to be doing a better job educating their newcomers than the continental European states.

    The U.S., Canada and Australia also possess resources, most critically food, that could benefit from growing demand in developing countries. Both North America and some European nations — notably the new Hansa of the Netherlands, Germany and Scandinavia – remain world leaders in scores of industrial endeavors, as well as technology- and culture-based industries.

    Together these Western countries can do much more to shape the global future than is commonly understood. But to do so this century they will need how to recover the animal spirits that drove their remarkable rise in the last.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and an adjunct fellow of the Legatum Institute in London. 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 Wally Gobetz

  • Demography vs. Geography: Understanding the Political Future

    Demography favors Democrats, as the influence of Latinos and millennials grows. Geography favors the GOP, as the fastest-growing states are solid red. A look at America’s political horizon.

    In the crushing wave that flattened much of the Democratic Party last month, two left-leaning states survived not only intact but in some ways bluer than before. New York and California, long-time rivals for supremacy, may both have seen better days; but for Democrats, at least, the prospects there seem better than ever.

    That these two states became such outliers from the rest of the United States reflects both changing economics and demographics. Over the past decade, New York and California underperformed in terms of job creation across a broad array of industries. Although still great repositories of wealth, their dominant metropolitan areas increasingly bifurcated between the affluent and poor. The middle class continues to ebb away for more opportune climes.

    Each state has also developed a large and politically effective public sector. In both states, no candidate opposed to its demands won statewide office in 2010. At the same time, the traditional, broad-based business interest has become increasingly ineffective; instead, some powerful groups such as big developers, Wall Street, Silicon Valley, and Hollywood, became part of the “progressive” coalition, willing and able to cut their own deals with the ruling Democratic elite.

    In New York, Republicans did capture a handful of seats in rural areas that have historically been friendly to the GOP, but in California the Republicans made no headway at all, even in rural areas. The difference here can be explained by demographics. In New York, the rural population is overwhelmingly Anglo; in California, much of it is Hispanic, a group that is both growing and, for the most part, tilting increasingly to the left.

    Can the New York and California models be replicated in other states and yield political gold for Democrats? The answer depends on how these two economies perform over the coming decades.

    Another state model competes for supremacy. It can be found in Texas, the Southeast, and parts of the intermountain West. The hallmarks are fiscal restraint and an emphasis on private-sector growth. If these free market-oriented states can produce better results than the coastal megastates, with their emphasis on government they could own the political future.

    Demographics: The Democrats’ Best Hope

    Right now, demography is the best friend Democrats have. Over the next four decades, the two groups that will increasingly dominate the political landscape are Hispanics and millennials (the generation born between 1983 and the millennium). Both groups tilted leftwards in recent elections. This trend should concern even the most jaded conservatives.

    The Latinization of America, even if immigration slows, is now inevitable. Only 12 percent of the U.S. population in 2000, Hispanics will become almost 25 percent by 2050. As more Latinos integrate into society and become citizens, they are gradually forming a political force. Since 1990, the number of registered Latino voters swelled from 4.4 million to nearly 10 million today.

    Anglos—60 percent of whom supported Republican congressional candidates in 2010—are beginning to experience an inexorable decline. In 1960, whites accounted for more than 90 percent of the electorate; today, that number is down to 75 percent. It will drop even more rapidly in the coming decades, with white non-Hispanics expected to account for barely half the nation’s population by 2050.

    California and New York are laboratories of the new ethnic politics. In New York, Latinos represent roughly 12 percent of the voters, while the overall “minority” vote has risen to well over 30 percent. California has, by far, the nation’s largest Hispanic population and Latinos are now roughly 24 percent of eligible voters. Overall, non-whites constitute well over a third of the electorate.

    The growth of the Latino vote works to Democrats’ advantage. Until the GOP-sponsored passage in 1994 of the anti-illegal alien Proposition 187, Latinos in California routinely voted upwards of 40 percent Republican (and even did so for Governor Arnold Schwarzenegger in 2006). This year, barely one-third of California Latinos supported Republican candidates Meg Whitman and Carly Fiorina.

    The Republican embrace of what is perceived by Hispanics as nativism has clearly alienated Latinos. This applies not only to California but also in Arizona, where Latino voters are now 18 percent of the total; in Nevada, they represent 14 percent and played a critical role in re-electing Majority Leader Harry Reid.

    This shift is all the more remarkable given the fact that many Democratic policies, on both social issues and regulations squashing economic opportunity, are at odds with Latino social conservatism and aspirational instincts.

    Of course, Latino voters are not the same in every corner of the country, and Republicans can do well with Hispanic voters if conditions are right. For example, Latinos in Florida and New Mexico support Republican candidates far more than in California or New York. Texas Republicans picked up two predominately Latino house districts along the Mexican border this year. And several recently elected high-profile Latinos—Florida Senator Marco Rubio and Governors Brian Sandoval in Nevada and Susan Martinez in New Mexico—earned strong Hispanic support (Rubio won more than 45 percent of Latino voters in a three-way race). Latino Republican candidates also won in Washington State and, of all places, Wyoming.

    The elevation of such emerging leaders could eventually turn the Latinos into a successfully contested group. But there is also a distinct possibility that emboldened nativist-oriented Republicans (backed largely by their older, Anglo base) could embrace policies, such as abolishing birthright citizenship, that seem almost calculated to alienate Latino and other immigrant voters.

    Millennials: Growing Up, Staying Left?

    Latinos and minorities are not even the GOP’s biggest demographic challenge. Millennials, the so called “echo boomers,” constitute a growing percentage of the electorate. They also tilted heavily Democrat. In 2008, millennials accounted for 17 percent of the nation’s voting-age population; by 2012, that share will grow to 24 percent. By 2020, they will account for more than one-third of the total population eligible to vote. Their power will wax while the seniors’, who broke decisively for the GOP this year, will inevitably fade.

    Millennials and generation X, their older brothers and sisters, constitute the majority of self-professed Democrats, note Mike Hais and Morley Winograd, authors of the forthcoming Millennial Momentum: America in the 21st Century. Last November, they supported Democratic candidates 55 percent to 42 percent, although their turnout flagged compared to what it was in 2008. They can be expected to turn out in bigger numbers in the 2012 presidential election.

    A connection exists between the Latinization trend and millennial voters. Boomers were 80 percent white; among millennials, at least the younger cohorts, the majority are from minority households.

    More critically, on a host of issues—from the environment to gay rights and economic re-distribution—this generation appears well to the left of older ones. One hopeful note for libertarian-minded Republicans: almost half believe that government is too involved in Americans’ lives (in this sense, their views are similar to those of older generations).

    Can millennials and generation X-ers be turned toward the center? History suggests this is at least possible. Boomers started off relatively left of the mainstream, notes political scientist Larry Sabato (although as Hais and Winograd suggest, Boomers were never as “left” as their louder, and often better-educated, generation “spokespeople”). In 1972, their first appearance at the ballot box, they split between Richard Nixon and George McGovern while older voters went overwhelmingly with President Nixon. In 1976, they helped put Jimmy Carter in office.

    But, over time, Boomers clearly shifted to the center-right, and eventually tracked close to the national averages. They supported Ronald Reagan in 1984, Democratic Leadership Council standard-bearer Bill Clinton, and George W. Bush. Politically, Sabato notes, “the boomers have become their parents.”

    Will today’s younger voters follow a similar arc? The key lies with how Republicans deal with critical issues, such as gay rights and the environment. It should be sobering for Republicans that a popular conservative like Senator Jim DeMint—the putative godfather of the Tea Party—lost overwhelmingly among South Carolina millennials by 54 to 46 percent against a marginal Democratic candidate.

    “This doesn’t say that the millennials will necessarily be Democrats forever and could never vote for Republicans,” notes Hais, who surveyed generational dynamics for Frank N. Magid Associates, an Iowa- and Los Angeles-based market research firm. “Obviously, the Democrats will have to produce, especially in the economy. But, I think that for millennials to begin to vote for Republicans, it is the Republicans and not millennials who will have to do most of the changing. The Republicans will have to come up with a way to appeal to an ethnically diverse, tolerant, civic generation—something they haven’t done very well to date.”

    Geography: The Great Republican Advantage

    Demographics may seem a long-term boon for Democrats, but geographic trends tilt in the opposite direction. Actually, Republicans did exceptionally well in the country’s fastest-growing places, both within metropolitan areas and by state. Democrats won the urban core, winning it by almost two-to-one in an otherwise disastrous year for them. But this is not where population growth is concentrated. Out of the 48 metropolitan areas, notes demographer Wendell Cox, suburban counties gained more migrants than core counties in 42 cases over the past decade. Overall suburbs and exurbs accounted for roughly 80 percent or more of all metropolitan growth.

    Suburbs and exurbs, where a clear majority of the country lives, are where American elections are determined. Dominated by the automobile single family houses, these areas shifted heavily to the Republicans this year, voting 54 to 43 percent for the GOP. Unless there is a startling economic development or the unlikely imposition of density-promoting national planning policy, the periphery is likely to remain the ultimate “decider” in American politics for the foreseeable future. The next generation of homebuyers, the millennials, note Hais and Winograd, also identify suburbs as their “ideal” place to live—even more than their boomer parents.

    Immigrants also are demonstrating a strong preference for the suburbs. Since 1980, the percentage of immigrants who live in the suburbs has grown from roughly 40 percent to above 52 percent. They also remained the preferred home for most boomers as they age.

    Republicans also dominate the fastest-growing states: Virginia, Utah, Florida, North Carolina, and, most importantly, Texas. Over the past decade, more than 800,000 more people moved to Texas than left the Lone Star State. In contrast, New York suffered a net migration loss of over 1.6 million, while California, once the nation’s leading destination, lost almost as many. Texas, Florida, and Virginia will gain congressional seats while New York will lose seats and California, for the first time in its history, will add none.

    More important still are the reasons driving this migration: job growth, cost structure, taxes, and regulation. While the highest earners in Hollywood, Silicon Valley, or Wall Street may still flourish in the two big blue states, jobs are evaporating for many middle- and working-class residents.

    For the vast majority of middle- and working-class people, the growth states are increasingly attractive places for relocation. Over the past decade, states like Texas, Virginia, North Carolina, and Utah, according to a Praxis Strategy Group analysis, enjoyed faster growth in middle-income jobs than in the deep blue strongholds. Texas, for instance, has increased middle-income jobs at seven times the rate of California over the past decade.

    This job growth extends beyond low-wage jobs at places like Walmart. Over the past decade, Texas has increased its number of so-called STEM jobs (science, technology, engineering, and mathematics related jobs) by 14 percent, well over twice the national average. Virginia and Utah performed even better. In contrast, New York and Massachusetts grew high-tech jobs by a paltry 2.4 percent, while California lagged with a tiny 1.7 percent increase.

    Jockeying for the Future

    In its first two years, the Obama administration tried to reverse these geographic trends by steering funds into universities, mainly those located in big cities and along the Northeast and California coasts. This tilt was natural for an administration which one Democratic mayor from central California described as “Moveon.org run by the Chicago machine.”

    The Obama administration’s “green” policies are also designed to favor major dense urban areas, with large increases in transit funding, high-speed rail projects, and grants for pro-density “smart growth” policies. But with the resounding defeat in November, the drive to force the population into dense and normally democratically inclined cities seems certain to ebb. The demise of the fiscal stimulus will put increased pressure on states like New York and California to cut down their public-sector growth, further threatening their weak recoveries.

    In the coming years, budget-constrained states will have to focus on private-sector jobs and growth. Given the likely tight job market over the next decade, particularly for minorities and millennials, Republicans could do well to demonstrate the superiority of their pro-enterprise model.

    Currently, red-leaning states top the list of states with the “best” business climates. Texas, North Carolina, Tennessee, and Virginia topped a recent survey by Chief Executive Officer magazine. In contrast, the bottom rungs are dominated by New York and California, as well as by longstanding Democratic bastions Michigan, New Jersey, and Massachusetts.

    To succeed, Democrats will need to prove capable of something other than a reverse Midas touch. They will need to develop a pro-growth, job-oriented program, something that they have not done well since the Clinton era. The decline in the numbers of pragmatic, business-oriented Democrats at the state and federal levels could make that job tougher than ever.

    It is still possible that, as millennials and Latinos flock to the suburbs, blue state demographics could overwhelm red state geography. In a decade, for example, Texas will likely be more far Latino than Asian; by 2040, according to demographer Steven Murdoch, the overall minority population, could be three times that of Anglos. At the same time, surging high-end employment will bring more educated, socially liberal people to the state. If these groups continue to favor the Democrats, Texas and other deeply red states could turn purple if not blue.

    In the long run, each party has strong cards to play. Demographic shifts favor Democrats, while geography tilts to the Republicans. Ultimately, the winner will be the party that offers a successful strategy for economic growth—but without culturally alienating the demographic groups destined to hold the balance in the political future.

    This article originally appeared at The American.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. 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 Eric Langhorst

  • A New Era For The City-state? The New World Order

    The city-state, a relic dating back to Classical or Renaissance times, is making a comeback. Driven by massive growth in global trade, shifts in economic power and the rise of emerging ethnic groups, today’s new independent cities have witnessed rapid, often startling, economic growth over the past decade.

    The contemporary city-state has flourished primarily in two regions: the Persian Gulf and Southeast Asia. The development of Hong Kong and Singapore provided a critical stage for Southeast Asia, which has been home to the world’s the greatest economic expansion. Hong Kong, now a quasi-independent part of China, competes with London’s West End as the world’s most expensive office market. By one account, it is experiencing the fastest growth in rents of major office markets in the past year. Once known for their poverty and destitution, these Asian city-states now boast incomes comparable to many European and North American cities.

    The Persian (or, as some like to call it, Arabian) Gulf constitutes the other hot bed for 21st Century city-states. Over the past decade, a string of once obscure cities from Dubai and Abu Dhabi to Qatar and Bahrain have risen to positions of global significance. Qatar, a tiny emirate with roughly 1.7 million people, will host the 2022 World Cup–an announcement that surprised nearly everyone. Abu Dhabi, a desert metropolis of some 2 million people, is undergoing the largest cultural development project on the planet, financed by the emirate’s huge oil wealth. This includes three massive museums: an outpost of the Louvre, a branch of the Guggenheim 12 times the size of the New York original, and a museum on maritime history.

    These city-states may share religious and political affiliations, but like their Phoenician, Greek and Renaissance forebears, they compete ferociously with one another. Today Dubai, which like Abu Dhabi is part of the United Arab Emirates, easily represents the most evolved expression of the modern Gulf city-state. Not much more than a tiny fishing and pirate haven until modern times, the city had less than 400,000 residents in 1985; it now has close to 2 million. In the past decade Dubai has become a city of superlatives: the world’s largest office tower; the Middle East’s largest port, airport and financial center.

    In many ways Dubai’s strengths are those of traditional city-states. Unlike other Gulf Arabs, the Dubai Emiratis have depended more on trade than oil for their wealth. Highly anxious to seize one of the most critical corridors of world trade, they have built the Middle East’s largest port at Jeber Ali and the massive Dubai International Airport, one of the largest and best-run on the planet.

    And to an extent largely unmatched in the Arab world, Dubai and its ruler, Mohammed bin Rashid Al Maktoum, have fostered an environment well-suited for global trade. Muslim cultural tendencies (like Friday holidays and largely halal food) are gently followed, but there’s room for a great deal of flexibility for expatriates.

    Inside the financial towers, it’s not unusual to see people dressed as they would in London or Wall Street–men in smart suits and women in knee-length skirts. Alcohol is readily available in the hotel restaurants, and the cab drivers are as likely to be Hindus from India as Muslims from an Arab country. Restaurants tend to be Lebanese, Persian or Western; there are karaoke clubs, bars and pubs across the city. Business in Dubai is conducted in many languages among a plethora of ethnic groups ranging from Americans and Brits to Indians, Russians, Pakistanis, Koreans and Lebanese, among others.

    “Funny” business, as in most trading cities, also fuels the Dubai’s dynamism. The city-state has been a convenient laudromat for money out of sanctioned Iran. Indeed, the Dubai Creek area near the souk is crowded with dhows being packed with crates ready to ship across the Gulf to the Islamic Republic. These can include some relatively harmless consumer goods like televisions, but some allege that some of the cargo includes materials for Iran’s nuclear program.

    Then there are the corrupt south Asian politicians, Russian Mafiosi or Southeast Asian drug dealers, who reside part time in the city and also deposit their cash there. Included in this cash in-flow, according to Wikileaks, are many millions of U.S. and other NATO aid dollars skimmed off by our wonderful Afghan allies. (Your tax dollars at work!)

    Both the predominate legitimate business and, probably, the thieves see much benefit in Dubai’s largely efficient authoritarian order. There are incidents of violence on occasion, but nothing on the scale of Karachi or Juarez, Mexico, gang wars. A safe place attracts all kinds of business, as was true back in the days when the Doges ran Venice.  Backed both by social order and monumental  infrastructure investments and high social order, Dubai now boasts the fourth most office space per capita of any large city on the planet–behind only New York, Paris and London.

    Since the 2008 financial crisis the office market has become severely overbuilt, transforming Dubai from one of the world’s hottest commercial markets to one of the sickest. Estimates of actual office vacancy rates start at 15% but could rise to 25% or even 50%, according to a recent Jones Lang estimate. However, a walk through the massive new “Business Bay” development–planned as 64 million square feet of office, commercial and residential space–resembles a walk through the real estate landscape left from a neutron bomb. You don’t see much in the way of people except   security guards and occasional day laborer. Even optimists, counting on a renewal of global economic growth, do not expect a major improvement in the overall property market until 2013 or 2014.

    A more serious and long-term problem may prove political. Unlike Singapore and Hong Kong, where most work is done by citizens, Dubai and the other gulf city-states rely almost completely on imported labor. Expatriates seem to do almost everything from city planning and administration work to running the hotels and basic infrastructure maintenance. This is not surprising as less than 1 in 5 residents is an Emirati.

    Some foreign residents live luxuriously, in communities like the Palm that look more like Newport Beach, Calif., than parts of the developing world. Many others inhabit dismal labor camps that are collections of cinderblocks in the desert. These camps, notes Kevin Phillips, a local evangelical missionary who works in Dubai, are plagued with problems typical of any settlement made up of young, temporary males workers: crime, drugs, fist-fights and prostitution.

    But arguably the biggest danger to Dubai–and to other Gulf city states–lies in the numbers of Arabic speaking workers and professionals who, despite sharing a language and religion with the Emiratis,  often feel only a tenuous stake in the city’s success. Unlike their counterparts in Singapore, they have virtually no chance to become citizens. Commitment to the long-term health of the city is not always evident among people who consider themselves mere sojourners.

    Yet for all these problems, one should not rule out Dubai or other Gulf urban areas like Abu Dhabi and Qatar as potential future great city-states. In a world where cross-cultural trade remains an ascendant phenomenon, we are likely to see the emergence of an expanding number of city-states over the coming years. Athens, Carthage or Venice may have constituted the great city-states of the past, but the 21st century is likely to  create its own batch  of luxuriant successors.

    This article originally appeared at Forbes.com

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and an adjunct fellow of the Legatum Institute in London. 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 *Crazy Diamond*

  • Toward a Continental Growth Strategy

    North America remains easily the most favored continent both by demography and resources. The political party that harnesses this reality will own the political future.

    America cannot afford a prolonged period of slow economic growth. But neither Democrats nor Republicans are prepared to offer a robust growth agenda. Regardless of what happened in the November midterm elections, the party that can outline an economic expansion strategy suitable to this enormous continental nation will own the political future.

    Economic expansion that barely exceeds the current 2 percent or less is woefully insufficient for the United States. Such meager growth could perhaps work in countries with very low birthrates and limited immigration, such as in much of Europe and Japan, but not in the demographically vibrant United States.

    In the years between 2000 and 2050, Europe’s workforce will decline by 25 percent; Japan’s by 44 percent; China’s by 10 percent. In contrast, America’s workforce is expected to expand by more than 40 percent, adding millions of new entrants from an increasingly diverse population.

    Given the growth in workforce, it is impossible to see how the country succeeds without rapid expansion not only of employment but also a broad-based wealth creation. Despite conservative attempts to dress up the numbers, the vast bulk of all the gains in wealth since 2000 have been achieved by the relatively small number of Americans with incomes significantly above the poverty level. Meantime many middle-tier educated and skilled workers have lost ground while the rate of upward mobility has stagnated.

    The collapse of the housing bubble has eliminated the one way that middle class families took advantage of economic growth during the Bush years. Under Obama, virtually all the gains have been to the stock market (up 30 percent) and corporate profits (42 percent). Meanwhile, weekly earnings, jobs, and home sales price all stagnated or declined. But the biggest price may be paid by young people; even those with degrees have lagged behind in wage growth as they crowd into a labor market potentially far tougher than the one their boomer parents faced.

    All this suggests an emerging “aspiration gap” that could define our politics for much of the next few decades. Today, belief in the achievability of the “American dream,” according to a recent survey by Strategy One, has dropped to the low 40s. Americans may still overwhelmingly believe in the ideal of upward mobility but, as individuals, now only a minority feel they can achieve it themselves.

    The “aspiration gap” fundamentally does not advantage either party at the moment. Democrats are set for large losses in the 2010 election. But party identification and approval for the GOP remain low, particularly among the rising minority and millennial constituencies. Even in suburbia, amid rapidly rising middle class angst, the Republicans, according to a recent Hofstra University poll, have lost more support than the Democrats since 2008. Independents have been the big winner and constitute the largest faction of suburbanites—more than 36 percent, compared to just 30 percent two years ago.

    Our Failing Parties: The Democrats

    Let’s start with the Obamacized Democratic Party. Up through the 1990s, the Democrats still maintained strong links to small businesses, private sector unions, and the old Midwest industrial economy. This gave them reasons to favor growth-inducing policies that could close the “aspiration gap.”

    But today the party has become captured largely by the coastally oriented alliance of public employees, their charges, greens, and the professiorate—what Fred Siegel calls an alliance of the “overeducated and the undereducated.” For the most part, these constituencies are largely detached from the private sector, and thus only tangentially interested in economic growth. Even high unemployment, unsurprisingly, was not the primary concern for an administration dominated by longtime public servants and tenured professors—people who rarely lose their jobs.

    This indifference stems not so much from a traditional socialist agenda, as imagined by some conservatives, but by the nature of the party’s constituencies. It is more a dictatorship of the professoriate than that of the proletariat.

    Further obscuring the growth agenda is the fact that some key advisors consider growth itself inherently evil. Take for instance the president’s science advisor John Holdren. A protégé of the Malthusian Paul Ehrlich, Holdren long has favored the planned “de-development” of Western economies in order to reduce consumption.

    The “de-development” agenda has been bolstered by the growth of the climate change industry. Proposals for “cap and trade” rules or Environmental Protection Agency regulations on greenhouse gases represent profound threats to basic industries like manufacturing, housing, and agriculture. In contrast, they have proven boffo for university research grant-seekers and Silicon Valley venture capitalists, who increasingly focus on “clean” technologies subsidized by government grants and edicts favoring their technologies.

    The climate change agenda also distorts the administration’s approach to infrastructure. Instead of focusing on transportation bottlenecks effecting companies and commuters on a daily basis, the administration has favored massive boondoggles such as high-speed rail or sometimes poorly conceived light-rail systems. These are often too expensive compared to alternatives, and not well-suited to the needs of most American communities or companies.

    Our Failing Parties: The Republicans

    Today, with as many as 25 million Americans unemployed or underemployed, the Democratic Party still seems to be missing a coherent program to put them back to work. Sadly, much the same can be said of the Republicans, who benefit from populist outrage about the stimulus, but also lack an answer to the deepening aspirational gap.

    The fundamental problem is obvious at the level of the Tea Party, the grassroots driving force behind today’s GOP. Tea partiers know what they are against—higher taxes and government spending—but have not developed much in the way of approaches to spur growth.

    This is epitomized by the career of the movement’s patron saint, Sarah Palin. Celebrated by many in the “lower 48,” Palin is widely seen among Alaska’s predominately Republican business community as indifferent to economic growth. As governor, they maintain, she proved more interested in redistribution to the middle class—through larger checks from the state’s energy fund—than in investing in things like new infrastructure.

    “She epitomizes the whole idea of we get a piece and no sense of planning for the future, about thinking about what we need to do,” notes Jim Egan executive director of Commonwealth North, a local think tank.

    Long-term growth, in Alaska and elsewhere, Egan suggests, needs government to play a critical supporting role. The fact that the Obama administration missed its opportunity to focus on basic infrastructure in its bungled, politically driven stimulus does not mean that investing in the future is an inherently bad idea.

    The Republican embrace of austerity represents good policy when it comes to reducing wasteful spending, notably on public employee pensions. But knee-jerk resistance to any government spending could prove detrimental in an increasingly competitive world.

    Needed: A Continental Strategy

    To promote economic growth, the country needs to develop a new national consensus around which I call “a continental strategy.” This would focus on taking advantage of the unique demographic and resource assets of this country as well as its North American neighbors, Mexico and Canada.

    Today the United States faces formidable competitors, notably from China, India, and Brazil. These are proud, vast countries with considerable resources and an expanding middle class population. At least in the short run, they suffer neither the ruinous demography of Japan nor the elaborate welfare burdens of Western Europe.

    Already these countries are investing in their basic infrastructure so that they can tie their vast landmass together and profit from it.

    Hard as it is to imagine amid the wreckage of the stimulus, American history is replete with examples of how government can actually do good things. The public support for canals, railway lines, the New Deal engineering and construction projects, the Interstate Highway, and space programs all greatly benefited the country’s economy. They underpinned first American leadership in the industrial age, and then in the information economy. In recent decades, public investment in basic infrastructure construction and maintenance has declined, even in the face of considerable population growth.

    “One looks back at that map ‘Landscape by Moses,’” writes the sociologist Nathan Glazer, about the legacy of New York City’s “master builder” Robert Moses, “and if one asks what has been added in the 50 years since Moses lost power, one has to say astonishingly: almost nothing.”

    Restoring our priority towards binding together and improving our continental infrastructure remains critical to achieving greater economic growth. Rather than a policy of retrenchment, it would represent a return to an approach that sparked our original ascendency and could gain broad bipartisan support.

    Even today, what makes a continental strategy so compelling lies with this often overlooked reality: North America remains easily the most favored continent both by demography and resources. It possesses the world’s second-largest oil reserves and massive, still largely untapped natural gas supplies.

    North America also constitutes by far the world’s richest agricultural area, with the most arable land. This is a huge advantage as global food demands grow over the next few decades. Critically, the continent also boasts more than four times as much water per capita as either Asia or Europe.

    Most important still, North America retains a unique demographic vitality among all advanced countries. It continues to lure upwardly mobile people from around the world: roughly half of the world’s educated migrants come to America, and a considerable number also head for Canada.

    Ultimately a continental strategy meets the needs of large segments of the country—ranging from immigrants and their children to millennials—who will dominate our emerging job market. These same groups in the coming decades will also shape our political future.

    The party that offers these new voters the greatest opportunities for work, raising a family, and buying a house will be the one that dominates the political future. As generational chroniclers Mike Hais and Morley Winograd, both committed Democrats, have pointed out, millennials are essentially nonideological; they will be attracted to those policies that work, both for society and for their young families.

    Although this year’s political results may please conservative ideologues, they should recognize that this represents only the defeat of poorly executed Obamian statism. The future belongs to whichever party emerges as the true party of growth.

    This article originally appeared at The American.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. 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 IronRodArt – Royce Bair

  • Hasta La Vista, Failure

    In his headier and hunkier days, Arnold Schwarzenegger spoke boldly about how “failure is not an option.” This kind of bravado worked well in the gym–and in a remarkable career that saw an inarticulate Austrian body-builder rise to the apex of Hollywood and California politics.

    But Schwarzenegger’s soon-to-be-ended seven-year reign as California’s governor can be best described in just that one simple world: failure.  It has been so bad that one even looks forward to having a pro, the eccentric Machiavellian master, Jerry Brown, replace him.

    Schwarzenegger never grew beyond the role of a clueless political narcissist. As the state sank into an ever deeper fiscal crisis, he continued to expend his energy on the grandiose and beyond the point: establishing a Californian policy for combating climate change, boosting an unaffordable High-Speed Rail system, and even eliminating plastic bags. These may be great issues of import, but they are far less pressing than a state’s descent into insolvency.

    The Terminator came into office ostensibly to reform California politics, reduce taxation and “blow up the boxes” of the state’s bureaucracy. He failed on all three counts. The California political system–particularly after the GOP’s November Golden State wipeout–is, if anything, more dominated by public employee unions and special interests (including “green” venture capitalists) than when Gray Davis ruled. Taxes, despite efforts by members of Schwarzenegger’s own Republican Party, have steadily increased, mostly in the form of sales and other regressive taxes. The bureaucracy, with its huge pension costs,  continued to swell until this year even as state unemployment climbed well over double digits.

    Schwarzenegger’s fiscal street cred was undermined by his support for unessential new bond issues for such things as stem cell research and high-speed rail. He threw financial prudence out the window in order to appease his business cronies and faithful media claque, particularly those working for mainstream eastern media.

    Looking back, it seems difficult to remember that Schwarzenegger’s election initially thrilled the business community, who saw him as a counterweight to the dominant axis of unions and green zealots. “An army of entrepreneurs,” as I wrote around the 2003 recall, rallied around a self-made man who seemed to understand the challenges of running a business.

    In the end Schwarzennegger failed these California optimists miserably. He ignored the impending crash of the state’s real-estate-driven “boom” and instead waxed lyrical on California as “the new Athens and Sparta,” destined to lead not only the nation but the world “into the future.” Sadly, a more apt classical analogy might be Carthage–except the burning and salting of the California has been committed by its own leaders.

    Today few governors, much less foreign leaders, would regard California’s government as anything other than a cautionary tale in colossal mismanagement. Many others, particularly newly elected Republican governors, regard the state’s persistent mismanagement as a mega opportunity for poaching jobs and companies  for the benefit of their constituents.

    At the heart of the Terminator’s failure lies the politics of delusion, perhaps not surprising for someone whose greatest success was based on fantasy.  Traditionally California Republican governors focus on the hoary economic fundamentals. But Schwarzenegger’s main economic advisor, San Francisco investment banker David Crane, has clung to the notion that California’s creative skills would allow the state to flourish amid “creative destruction.”

    This delusion has failed to materialize. Silicon Valley’s venture capitalists, the much celebrated architects for a creative revival, increasingly seem a spent force, investing fewer funds with less success than a decade ago.  2009 saw fewer new venture fund financing than in any year since 2003, while actual dollars raised have been dropping since the late 1990s.

    And for all their self-importance, the venture capitalists are hardly the game-changing visionaries of the past; instead, they seek federal subsidies or back social networking start-ups that provide far less  in the way of employment prospects than legendary successes like Intel or Apple. The Google-Facebook economy has wowed the business media, but their direct  impact on jobs is largely concentrated  in a few affluent areas around Palo Alto and parts of San Francisco. Despite the celebrations of these companies, much of the more decidedly middle-class parts of the Valley remain in a deep recession, with over 15 empire state buildings worth of empty space.

    Of course, apologists point out, quite correctly, that many signature corporations are keeping their headquarters in the Golden State–after all not many CEOs are anxious  to leave the climatically blessed environs of Atherton, Palo Alto, San Diego or West Los Angeles for a new life in  Salt Lake, Shanghai or even Austin.  But these same CEOs are shifting manufacturing, tech support and. increasingly. research at a rapid clip to places with lower taxes, more accommodating business climates and a better chance for the non-filty-rich to live a good life.

    This slow but steady leakage is draining the state economy. California’s share of the nation’s jobs and national income continues to drop.  In the last seven years, California has underperformed the nation in generating both middle-income and tech-oriented jobs. Unemployment has remained two points or more higher than the national average.

    The draconian greenhouse gas reductions now proudly touted by Schwarzenegger could make this worse. If the nation was following similar regulations, something conceivable prior to the November elections, the pain may have been more equally shared and an aggressive stategy aimed at “green” industries could more likely have proved  a decent bet. Now companies in California and a handful of other similarly minded states simply will have to cope with regulatory overkill and much higher energy costs against   competitors domestically and around the world.

    The production sector, the most vulnerable target of the green machine, is already reeling. Manufacturing losses, over 32% since 2001, have remained well above the national average–with a toll of over 600,000 jobs .  Over the last three years the state ranked dead last among the nation’s 25 largest states in terms of adding new manufacturing capacity.

    This, of course, has had little impact on those who inhabit the upper echelons of Hollywood or Silicon Valley. Arnold’s failure has been toughest on California’s working and middle classes, the very people who once saw in him a savior.

    Now, in an act of what seems like desperation, Californians have brought back that quirky dinosaur, Jerry Brown, who at least one can never call either stupid or naive. Brown’s campaign scored well by linking his amateurish opponent, Meg Whitman, to Arnold’s patent lack of political savvy. Brown recognized that  Schwarzenegger had done a great job in discrediting both himself and the state GOP. The  Terminator, who once enjoyed a 65%  approval rating,  suffers the  lowest popularity rating of any California governor in the past 50 years –a dismal 22%, according to the latest Field Poll.

    Six in ten Californians now think Schwarzennger is leaving the state in worse shape than he found it, and they are right.  So what do you call a star who has lost the admiration and support of his fans? There’s just one word in this script: failure.

    This article originally appeared at Forbes.com

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. 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 Nate Mandos

  • Education Wars: The New Battle For Brains

    The end of stimulus — as well as the power shift in Congress — will have a profound effect on which regions and states can position themselves for the longer-term recovery. Nowhere will this be more critical than in the battle for brains.

    In the past, and the present, places have competed for smart, high-skilled newcomers by building impressive physical infrastructure and offering incentives and inducements for companies or individuals. But the battle for the brains — and for long-term growth — is increasingly tied to whether a state can maintain or expand its state-supported higher education. This is particularly critical given the growing student debt crisis, which may make public institutions even more attractive to top students.

    The great role model for higher-education-driven growth has been California. The Golden State’s master plan for education — developed under Pat Brown in 1960 — created an elaborate multi-tiered public system that offered students a low-cost and generally high-quality alternative education. Over the next half century, California became, in historian Kevin Starr’s phrase, a “utopia for higher education,” as well as a model for other states and much of the world.

    Today many of the states that copied California’s model — notably North Carolina, Texas and Virginia- — threaten to upend the Golden State’s dominance of public higher education. These states now all spend far more than traditional leader California when you look at percentage of state expenditures; Virginia, for example, spends twice as much of its state budget on higher ed than California does. New York and Illinois spend an even a smaller percentage.

    The combination of fiscal woes and misplaced priorities has engendered spending cuts in California. Tuitions for higher public education have soared: In 2009 they were raised 30%, and they have been raised over 100% over the past decade.

    To be sure, the University of California (disclaimer: I attended the Berkeley campus) retains a huge reservoir of talent, with courses taught by 111 Nobel Laureates. It still dominates lists of top public universities;  six of the top 14 schools in the US News and World Report 2010 rankings are UC schools.  But the signs of relative decline are clear. In 2004, for example, the London-based Times Higher Education ranked UC Berkeley the second leading research university in the world, just behind Harvard; in 2009, that ranking, due largely to an expanding student-to-faculty ratio, had tumbled to 39th place.

    Other states are now looking to knock California further off its perch. In 2009 alone the University of Texas lured three senior faculty members from UC. As departments shrink at places like Berkeley, those in schools such as the University of Texas at Austin, Texas A&M and Texas Tech have expanded rapidly, adding students and buildings.

    Of course, these schools also have budget problems, and they have increased tuition too–albeit at a significantly lower rate. But for the most part, these up-and-coming state systems are more focused on expansion than on retrenching and survival. While some in California question the viability of some of the newer UC campuses, Texas is busily expanding its roster of tier-one, public research universities, seeking to add the University of Houston as well as UT campuses in north Texas, Arlington, Dallas, El Paso and San Antonio to the ranks of UT Austin, Texas A&M and Rice, a private school in Houston.

    Texas Tech,  best known for its engineering and agriculture-oriented programs, for example, is thriving. Located on the windy Great Plains on the western side of the state, it is far from the state’s major metropolitan areas, and its home town of Lubbock (population: 225,000) is likely not high on anyone’s list of hip and cool college towns. Yet the school, which enjoys strong alumni and business support, is in the midst of a major building boom and a $1 billion capital campaign. When I visited there earlier this month, the campus was full of construction crews; Texas Tech has added over 3000 students in the past two years and now has over 31,000 students.

    Other unlikely upstarts include the University of North Dakota, which has boosted spending by 18.5% in 2009, a luxury afforded by the state’s booming energy, agriculture and increasingly high-tech economy. North Dakota, which historically has suffered significant loss of young talent, has set a goal to rank No. 1 in the average education of its population. Today it already ranks No. 3 in terms of college-educated residents between the ages of 25 and 34.

    These shifts could presage — and to some degree enhance — what is already a powerful trend toward states that, in the past, have been educational also-rans. Although Texas also faces budgetary constraints, its annualized $9 billion deficit is dwarfed by those of California, Illinois and New York. And those bluish states already have much higher tax rates, which leave less room for revenue increases. Texas also has the luxury of an $8.2 billion “rainy day” fund, as well as a more vibrant economy.

    More important still, states like North Carolina, Virginia and Texas continue to grow more rapidly than the older brain-center states. This is particularly true in terms of the high-tech jobs many graduates would likely seek.  Indeed since 2002 these states have all enjoyed far greater growth rates in high-tech employment than California, Illinois, Michigan or New York. They also have added more new tech jobs in actual numbers than California–despite their significantly smaller size.

    Migration patterns are also changing among college-educated workers. Between 2005 and 2007, Texas, Virginia and North Carolina already enjoy higher rates per capita of net migration of educated workers between the ages of 22 and 39 than California, New York or Massachusetts.

    This advantage could expand as the upcoming states increase their educational offerings along with employment opportunities. Students may end up tempted to attend schools closer to where there is job growth. Unlike Austin and Raleigh-Durham, which have rapidly expanded tech employment, Silicon Valley has produced virtually no new net tech jobs for the past decade.

    The second impact may  be more subtle, as declining revenues from businesses and individuals reduces the opportunity to boost education spending. As the country stumbles into this recovery, the greatest advantage will fall not only to states with the most natural resources, but those with the best-educated human resources. For a half century this is a game that states like California have played to perfection, but it is one in which other places are likely to catch up, and perhaps even pass. The long-term implications for the nation’s economic geography could prove profound.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. 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 Luca Zappa

  • Korea Conflict Shows That Borderlands Are Zones of Danger

    The current conflict between the Koreas illustrates a broader global trend toward chaos along borders separating rich and poor countries. Ultimately, this reflects the resentments of a poor neighbor against a richer one. Feeling it has little to lose, the poorer neighbor engages recklessly in the hope of gaining some sort of tribute or recognition   from the better-heeled neighbor, or at least boosting its own self-respect.

    The Korean situation epitomizes the fundamental danger when rich and poor countries live adjacent to one another. According to 2006 statistics, South Korea has a per capita income of roughly $18,000; the North’s stands at $1,300. Clearly, the threat of leveling Seoul, a wealthy and successful city, has limited South Korea’s ability to respond as it might otherwise to its nasty, militaristic neighbor, whose people live on the brink of starvation.

    Conflicts between poorer peoples and richer neighbors have been part of human history since antiquity. In ancient Mesopotamia the rough Semites attacked and eventually overcame the wealthier, more sophisticated Sumerians. This pattern was repeated throughout the ancient world, for example, pitting Chinese against the peoples of the Steppes, hurling German and Hunnish barbarian races against the Romans, and in countless upheavals throughout Meso-America.

    Although the wealthier neighbor can beat back the threat through better organization and technology, often it’s the poor neighbor who ultimately triumphs.   The Great Arab historian Ibn Khaldun, a student of Mid-east  and Mediterranean politics in the 14th  century, even developed a theory positing that the poorer, hungrier neighbor often held the long term advantage Of the more affluent countries, he writes,  “Time feasts on them, as their energy is exhausted by well-being and their vigor drained by the nature of luxury.”

    As the settled, wealthier nation becomes soft and “senile,” Khaldun observed–and ultimately either unwilling or incapable of overcoming the threat from their more savage neighbor. You can people off only so long before you drain your own treasury and self-respect. If Khaldun is right, the world is going to become a more unsafe place in the coming decade as the great unwashed seek to crash the gilded gates.

    Other changes have made borderlands more dangerous in recent decades. During the Cold War era, such conflicts were often mediated by the two great super-powers. There were clear zones of influence. But in an increasingly chaotic multi-polar world, where power is diffused and technology sometimes favors the rogue, it become increasingly difficult to manage these conflicts. In Korea we can see this in the gamesmanship of China, which further limits any strong American and South Korean response.

    But Korea is hardly the only place where borderlands have become hot zones. There are many places around the world where rich nations abut poorer ones, creating serious potential for major conflict. Among the most worrisome:

    The Saudi/Yemen border. Oil-rich Saudi Arabia boasts a per capita income over 13 times greater than that of its southern neighbor. Criminal elements, illegal immigrants and a growing al Qaeda presence, cross the porous border. These could ultimately undermine the country with the largest proven energy reserves. Over 130 Saudi soldiers have been killed this past year along this 1,100 mile long desolate border region–so desolate it was only demarcated in 2000.

    Israel and Gaza/Palestine. Ancient hatreds make this a particularly worrisome set of borders.  There are huge gaps not only in ideology and religion but income. Israel’s 2006 per capita income was just shy of $18,000, while Palestine’s was under $800 and Gaza’s under $500. Such huge gaps, as can be seen in the Koreas, tend to exacerbate already great tensions.

    Spain/Maghrebian countries. The flow of immigrants from Muslim North Africa into southern Europe has become a major international flashpoint, particularly as Spain, Italy and countries continue to experience major economic dislocation. There are well over 1 million Muslim immigrants in the country. The income difference between these two adjacent worlds can be immense; Spain’s per capita GDP is more than ten times that of Morocco, its closest Arab neighbor. The flow of immigrants and far higher fertility rates among them can be unsettling to some.   ”Tomorrow Europe might no longer be European,” Libya’s Leader Muammar Ghadafi suggested recently.

    U.S./Mexico. Although relations between the two countries have been cordial under both Presidents George W. Bush and Barack Obama, the ground level violence in Mexico–claiming 26,000 deaths since December 2006–is both driving Mexicans north and driving Americans away from the border region. With U.S. per capita incomes over six times that of Mexico, the temptation for criminals, as well as illegal immigrants, to cross the border can be overwhelming, and unsettling. Border violence is way up, leading to calls for tighter controls over immigration.

    Two recently discovered tunnels for drug smuggling near San Diego, complete with rail cars, indicate how inventive some cross-border entrepreneurs can be. But it is a mistake to see borderland as only bastions of criminality and unrest. Until recently the U.S./Mexico border constituted one of North America’s fastest-growing economic regions, marrying U.S. technology and investment with hard-working Mexican labor.

    Perhaps the most positive model of harmonious border relations can be seen along the border of Singapore and Malaysia. Although Singapore’s per capita income is more than five times that of Malaysia, there are ambitious plans to build a vast new business complex in the Iskandar section of Malaysia’s Johore State   The Malaysians envision “a strong and sustainable metropolis of international standing.” Right now the most obvious signs of mega-development in the area are somewhat oversized government buildings.

    If the cross-straits development materializes, this region would both expand the economic footprint of the predominately Chinese city-state and its largely Muslim neighbor. Instead of worrying about drugs, terrorists or illegal migrants, some well-placed Singaporeans see Johore as a base to expand its manufacturers and those of foreign firms.

    There is also a swank upscale “Leisure Farm” that offers green-tinged amenities for Singapore’s often crammed and stressed residents. Some  Singaporeans privately doubt the ability of Malaysians to compete with them in higher-value-added fields, but others wonder if their growing investment across the straits may be creating a tough competitor.

    Ultimately,   the planet’s future depends on successfully integrating the economies of rich countries and poorer ones. Aspiring countries have much to offer their rich neighbors–in terms of markets, labor and entrepreneurial energy. One hopes the world will see more of the commerce-driven model of Malaysia, and less of the kind of potentially dreadful military conflict now brewing along the Korean frontier.

    This article originally appeared at Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. 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 anja_johnson