New Geography

Author: Joel Kotkin

  • Urban Legends: Why Suburbs, Not Dense Cities, are the Future

    The human world is fast becoming an urban world — and according to many, the faster that happens and the bigger the cities get, the better off we all will be. The old suburban model, with families enjoying their own space in detached houses, is increasingly behind us; we’re heading toward heavier reliance on public transit, greater density, and far less personal space. Global cities, even colossal ones like Mumbai and Mexico City, represent our cosmopolitan future, we’re now told; they will be nerve centers of international commerce and technological innovation just like the great metropolises of the past — only with the Internet and smart phones.

    According to Columbia University’s Saskia Sassen, megacities will inevitably occupy what Vladimir Lenin called the “commanding heights” of the global economy, though instead of making things they’ll apparently be specializing in high-end “producer services” — advertising, law, accounting, and so forth — for worldwide clients. Other scholars, such as Harvard University’s Edward Glaeser, envision universities helping to power the new “skilled city,” where high wages and social amenities attract enough talent to enable even higher-cost urban meccas to compete.

    The theory goes beyond established Western cities. A recent World Bank report on global megacities insists that when it comes to spurring economic growth, denser is better: “To try to spread out economic activity,” the report argues, is to snuff it. Historian Peter Hall seems to be speaking for a whole generation of urbanists when he argues that we are on the cusp of a “coming golden age” of great cities.

    The only problem is, these predictions may not be accurate. Yes, the percentage of people living in cities is clearly growing. In 1975, Tokyo was the largest city in the world, with over 26 million residents, and there were only two other cities worldwide with more than 10 million residents. By 2025, the U.N. projects that there may be 27 cities of that size. The proportion of the world’s population living in cities, which has already shot up from 14 percent in 1900 to about 50 percent in 2008, could be 70 percent by 2050. But here’s what the boosters don’t tell you: It’s far less clear whether the extreme centralization and concentration advocated by these new urban utopians is inevitable — and it’s not at all clear that it’s desirable.

    Not all Global Cities are created equal. We can hope the developing-world metropolises of the future will look a lot like the developed-world cities of today, just much, much larger — but that’s not likely to be the case. Today’s Third World megacities face basic challenges in feeding their people, getting them to and from work, and maintaining a minimum level of health. In some, like Mumbai, life expectancy is now at least seven years less than the country as a whole. And many of the world’s largest advanced cities are nestled in relatively declining economies — London, Los Angeles, New York, Tokyo. All suffer growing income inequality and outward migration of middle-class families. Even in the best of circumstances, the new age of the megacity might well be an era of unparalleled human congestion and gross inequality.

    Perhaps we need to consider another approach. As unfashionable as it might sound, what if we thought less about the benefits of urban density and more about the many possibilities for proliferating more human-scaled urban centers; what if healthy growth turns out to be best achieved through dispersion, not concentration? Instead of overcrowded cities rimmed by hellish new slums, imagine a world filled with vibrant smaller cities, suburbs, and towns: Which do you think is likelier to produce a higher quality of life, a cleaner environment, and a lifestyle conducive to creative thinking?

    So how do we get there? First, we need to dismantle some common urban legends.

    Perhaps the most damaging misconception of all is the idea that concentration by its very nature creates wealth. Many writers, led by popular theorist Richard Florida, argue that centralized urban areas provide broader cultural opportunities and better access to technology, attracting more innovative, plugged-in people (Florida’s “creative class“) who will in the long term produce greater economic vibrancy. The hipper the city, the mantra goes, the richer and more successful it will be — and a number of declining American industrial hubs have tried to rebrand themselves as “creative class” hot spots accordingly.

    But this argument, or at least many applications of it, gets things backward. Arts and culture generally do not fuel economic growth by themselves; rather, economic growth tends to create the preconditions for their development. Ancient Athens and Rome didn’t start out as undiscovered artist neighborhoods. They were metropolises built on imperial wealth — largely collected by force from their colonies — that funded a new class of patrons and consumers of the arts. Renaissance Florence and Amsterdam established themselves as trade centers first and only then began to nurture great artists from their own middle classes and the surrounding regions.

    Even modern Los Angeles owes its initial ascendancy as much to agriculture and oil as to Hollywood. Today, its port and related industries employ far more people than the entertainment business does. (In any case, the men who built Hollywood were hardly cultured aesthetes by middle-class American standards; they were furriers, butchers, and petty traders, mostly from hardscrabble backgrounds in the czarist shtetls and back streets of America’s tough ethnic ghettos.) New York, now arguably the world’s cultural capital, was once dismissed as a boorish, money-obsessed town, much like the contemporary urban critique of Dallas, Houston, or Phoenix.

    Sadly, cities desperate to reverse their slides have been quick to buy into the simplistic idea that by merely branding themselves “creative” they can renew their dying economies; think of Cleveland’s Rock and Roll Hall of Fame, Michigan’s bid to market Detroit as a “cool city,” and similar efforts in the washed-up industrial towns of the British north. Being told you live in a “European Capital of Culture,” as Liverpool was in 2008, means little when your city has no jobs and people are leaving by the busload.

    Even legitimate cultural meccas aren’t insulated from economic turmoil. Berlin — beloved by writers, artists, tourists, and romantic expatriates — has cultural institutions that would put any wannabe European Capital of Culture to shame, as well as a thriving underground art and music scene. Yet for all its bohemian spirit, Berlin is also deeply in debt and suffers from unemployment far higher than Germany’s national average, with rates reaching 14 percent. A full quarter of its workers, many of them living in wretched immigrant ghettos, earn less than 900 euros a month; compare that with Frankfurt, a smaller city more known for its skyscrapers and airport terminals than for any major cultural output, but which boasts one of Germany’s lowest unemployment rates and by some estimates the highest per capita income of any European city. No wonder Berlin Mayor Klaus Wowereit once described his city as “poor but sexy.”

    Culture, media, and other “creative” industries, important as they are for a city’s continued prosperity, simply do not spark an economy on their own. It turns out to be the comparatively boring, old-fashioned industries, such as trade in goods, manufacturing, energy, and agriculture, that drive the world’s fastest-rising cities. In the 1960s and 1970s, the industrial capitals of Seoul and Tokyo developed their economies far faster than Cairo and Jakarta, which never created advanced industrial bases. China’s great coastal urban centers, notably Guangzhou, Shanghai, and Shenzhen, are replicating this pattern with big business in steel, textiles, garments, and electronics, and the country’s vast interior is now poised to repeat it once again. Fossil fuels — not art galleries — have powered the growth of several of the world’s fastest-rising urban areas, including Abu Dhabi, Houston, Moscow, and Perth.

    It’s only after urban centers achieve economic success that they tend to look toward the higher-end amenities the creative-classers love. When Abu Dhabi decided to import its fancy Guggenheim and Louvre satellite museums, it was already, according to Fortune magazine, the world’s richest city. Beijing, Houston, Shanghai, and Singapore are opening or expanding schools for the arts, museums, and gallery districts. But they paid for them the old-fashioned way.

    Nor is the much-vaunted “urban core” the only game in town. Innovators of all kinds seek to avoid the high property prices, overcrowding, and often harsh anti-business climates of the city center. Britain’s recent strides in technology and design-led manufacturing have been concentrated not in London, but along the outer reaches of the Thames Valley and the areas around Cambridge. It’s the same story in continental Europe, from the exurban Grand-Couronne outside of Paris to the “edge cities” that have sprung up around Amsterdam and Rotterdam. In India, the bulk of new tech companies cluster in campus-like developments around — but not necessarily in — Bangalore, Hyderabad, and New Delhi. And let’s not forget that Silicon Valley, the granddaddy of global tech centers and still home to the world’s largest concentration of high-tech workers, remains essentially a vast suburb. Apple, Google, and Intel don’t seem to mind. Those relative few who choose to live in San Francisco can always take the company-provided bus.

    In fact, the suburbs are not as terrible as urban boosters frequently insist.

    Consider the environment. We tend to associate suburbia with carbon dioxide-producing sprawl and urban areas with sustainability and green living. But though it’s true that urban residents use less gas to get to work than their suburban or rural counterparts, when it comes to overall energy use the picture gets more complicated. Studies in Australia and Spain have found that when you factor in apartment common areas, second residences, consumption, and air travel, urban residents can easily use more energy than their less densely packed neighbors. Moreover, studies around the world — from Beijing and Rome to London and Vancouver — have found that packed concentrations of concrete, asphalt, steel, and glass produce what are known as “heat islands,” generating 6 to 10 degrees Celsius more heat than surrounding areas and extending as far as twice a city’s political boundaries.

    When it comes to inequality, cities might even be the problem. In the West, the largest cities today also tend to suffer the most extreme polarization of incomes. In 1980, Manhattan ranked 17th among U.S. counties for income disparity; by 2007 it was first, with the top fifth of wage earners earning 52 times what the bottom fifth earned. In Toronto between 1970 and 2001, according to one recent study, middle-income neighborhoods shrank by half, dropping from two-thirds of the city to one-third, while poor districts more than doubled to 40 percent. By 2020, middle-class neighborhoods could fall to about 10 percent.

    Cities often offer a raw deal for the working class, which ends up squeezed by a lethal combination of chronically high housing costs and chronically low opportunity in economies dominated by finance and other elite industries. Once the cost of living is factored in, more than half the children in inner London live in poverty, the highest level in Britain, according to a Greater London Authority study. More than 1 million Londoners were on public support in 2002, in a city of roughly 8 million.

    The disparities are even starker in Asia. Shenzhen and Hong Kong, for instance, have among the most skewed income distributions in the region. A relatively small number of skilled professionals and investors are doing very well, yet millions are migrating to urban slums in places like Mumbai not because they’ve all suddenly become “knowledge workers,” but because of the changing economics of farming. And by the way, Mumbai’s slums are still expanding as a proportion of the city’s overall population — even as India’s nationwide poverty rate has fallen from one in three Indians to one in five over the last two decades. Forty years ago, slum dwellers accounted for one in six Mumbaikars. Now they are a majority.

    To their credit, talented new urbanists have had moderate success in turning smaller cities like Chattanooga and Hamburg into marginally more pleasant places to live. But grandiose theorists, with their focus on footloose elites and telecommuting technogeniuses, have no practical answers for the real problems that plague places like Mumbai, let alone Cairo, Jakarta, Manila, Nairobi, or any other 21st-century megacity: rampant crime, crushing poverty, choking pollution. It’s time for a completely different approach, one that abandons the long-held assumption that scale and growth go hand in hand.

    Throughout the long history of urban development, the size of a city roughly correlated with its wealth, standard of living, and political strength. The greatest and most powerful cities were almost always the largest in population: Babylon, Rome, Alexandria, Baghdad, Delhi, London, or New York.

    But bigger might no longer mean better. The most advantaged city of the future could well turn out to be a much smaller one. Cities today are expanding at an unparalleled rate when it comes to size, but wealth, power, and general well-being lag behind. With the exception of Los Angeles, New York, and Tokyo, most cities of 10 million or more are relatively poor, with a low standard of living and little strategic influence. The cities that do have influence, modern infrastructure, and relatively high per capita income, by contrast, are often wealthy small cities like Abu Dhabi or hard-charging up-and-comers such as Singapore. Their efficient, agile economies can outpace lumbering megacities financially, while also maintaining a high quality of life. With almost 5 million residents, for example, Singapore isn’t at the top of the list in terms of population. But its GDP is much higher than that of larger cities like Cairo, Lagos, and Manila. Singapore boasts a per capita income of almost $50,000, one of the highest in the world, roughly the same as America’s or Norway’s. With one of the world’s three largest ports, a zippy and safe subway system, and an impressive skyline, Singapore is easily the cleanest, most efficient big city in all of Asia. Other smaller-scaled cities like Austin, Monterrey, and Tel Aviv have enjoyed similar success.

    It turns out that the rise of the megacity is by no means inevitable — and it might not even be happening. Shlomo Angel, an adjunct professor at New York University’s Wagner School, has demonstrated that as the world’s urban population exploded from 1960 to 2000, the percentage living in the 100 largest megacities actually declined from nearly 30 percent to closer to 25 percent. Even the widely cited 2009 World Bank report on megacities, a staunchly pro-urban document, acknowledges that as societies become wealthier, they inevitably begin to deconcentrate, with the middle classes moving to the periphery. Urban population densities have been on the decline since the 19th century, Angel notes, as people have sought out cheaper and more appealing homes beyond city limits. In fact, despite all the “back to the city” hype of the past decade, more than 80 percent of new metropolitan growth in the United States since 2000 has been in suburbs.

    And that’s not such a bad thing. Ultimately, dispersion — both city to suburb and megacity to small city — holds out some intriguing solutions to current urban problems. The idea took hold during the initial golden age of industrial growth — the English 19th century — when suburban “garden cities” were established around London’s borders. The great early 20th-century visionary Ebenezer Howard saw this as a means to create a “new civilization” superior to the crowded, dirty, and congested cities of his day. It was an ideal that attracted a wide range of thinkers, including Friedrich Engels and H.G. Wells.

    More recently, a network of smaller cities in the Netherlands has helped create a smartly distributed national economy. Amsterdam, for example, has low-density areas between its core and its corporate centers. It has kept the great Dutch city both livable and competitive. American urbanists are trying to bring the same thinking to the United States. Delore Zimmerman, of the North Dakota-based Praxis Strategy Group, has helped foster high-tech-oriented development in small towns and cities from the Red River Valley in North Dakota and Minnesota to the Wenatchee region in Washington State. The outcome has been promising: Both areas are reviving from periods of economic and demographic decline.

    But the dispersion model holds out even more hope for the developing world, where an alternative to megacities is an even more urgent necessity. Ashok R. Datar, chairman of the Mumbai Environmental Social Network and a longtime advisor to the Ambani corporate group, suggests that slowing migration to urban slums represents the most practical strategy for relieving Mumbai’s relentless poverty. His plan is similar to Zimmerman’s: By bolstering local industries, you can stanch the flow of job seekers to major city centers, maintaining a greater balance between rural areas and cities and avoiding the severe overcrowding that plagues Mumbai right now.

    Between the 19th century, when Charles Dickens described London as a “sooty spectre” that haunted and deformed its inhabitants, and the present, something has been lost from our discussion of cities: the human element. The goal of urban planners should not be to fulfill their own grandiose visions of megacities on a hill, but to meet the needs of the people living in them, particularly those people suffering from overcrowding, environmental misery, and social inequality. When it comes to exporting our notions to the rest of the globe, we must be aware of our own susceptibility to fashionable theories in urban design — because while the West may be able to live with its mistakes, the developing world doesn’t enjoy that luxury.

    This article originally appeared at Foreign Policy

    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: Mugley

  • Mass Transit: The Great Train Robbery

    Last month promoters of the Metropolitan Transit Authority’s Los Angeles rail projects, both past and future, held a party to celebrate their “success.” Although this may well have been justified for transit-builders and urban land speculators, there may be far less call for celebration among L.A.’s beleaguered commuters.

    Despite promises that the $8 billion invested in rail lines over the past two decades would lessen L.A.’s traffic congestion and reshape how Angelenos get to work, the sad reality is that there has been no increase in MTA transit ridership since before the rail expansion began in 1985.

    Much of the problem, notes Tom Rubin, a former chief financial officers for the MTA’s predecessor agency, stems from the shift of funding priorities to trains from the city’s more affordable and flexible bus network. Meanwhile, traffic has gotten worse, with delay hours growing from 44 hours a year in 1982 to 70 hours in 2007.

    Sadly, this situation is not unique to Los Angeles. In cities across the country where there have been massive investments in light rail–from the Portland area to Dallas and Charlotte, N.C., and a host of others–the percentage of people taking transit has stagnated or even declined. Nationwide, the percentage of people taking transit to work is now lower than it was in 1980.

    None of this is to argue that we should not invest in transit. It even makes sense if the subsidy required for each transit trip is far higher than for a motorist on the streets or highways. Transit should be considered a public good, particularly for those without access to a car–notably young people, the disabled, the poor and the elderly. Policy should focus on how we invest, at what cost and, ultimately, for whose benefit.

    In some regions with large concentrations of employment, downtown major rail systems often attract many riders (although virtually all lose lots of money). The primary example would be the New York City area, which is one of only two regions (the other being Washington, D.C.) with over one-fifth of total employment in the urban core. In the country as a whole barely 10% of employment is in the city; and in many cities that grew most in the 20th century, such as Dallas, Miami, Los Angeles and Phoenix, the central business district’s share falls well under 5%.

    Some other urban routes–for example between Houston’s relatively buoyant downtown and the massive, ever expanding Texas Medical Center–could potentially prove suitable for trains. But most transit investments would be far more financially sustainable if focused on more cost-efficient methods such as rapid bus lanes, which, according to the Government Accountability Office, is roughly one-third the cost of light rail.

    Making the right choices has become more crucial during the economic downturn, even in New York City. The city and the federal government continue to pour billions into a gold-plated Second Avenue subway but now plan to cut back drastically on the bus service that serves large numbers of commuters from the outer boroughs and more remote parts of Manhattan.

    Ultimately the choice to invest in new subways and light rail as opposed to buses reflects both a class bias and the agenda of what may best described as the “density lobby.” The people who will ride the eight-mile long Second Avenue subway, now under construction for what New York magazine reports may be a total cost of over $17 billion, are largely a very affluent group. The new subway line will also provide opportunity for big developers to build high-density residential towers along the route. In contrast, the bus-riders, as the left-of-center City Limits points out, tend to be working- and middle-class residents from more unfashionable, lower-density districts in the Bronx, Queens, Brooklyn and Staten Island.

    The proposals for High Speed Rail–a favorite boondoggle of the Obama administration and some state administrators–reveals some of the same misplaced fiscal priorities. California’s State Treasurer, Democrat Bill Lockyer, has lambasted the proposed HSR line between Los Angeles and the Bay Area, suggesting the state may not be able to sell private investors on between $10 billion and $12 billion in bonds without additional public subsidies.

    Other prominent Democrats as well as the State Auditor’s office have challenged the promoters’ claims about the viability of the system and its potential drain on more reasonable priced transit project.

    This issue funding priorities was raised recently by the current administrator of the Federal Transportation Authority, Peter Rogoff, who questioned the wisdom of expanding expensive rail and other transit projects when many districts “can’t afford to operate” their own systems. He noted that already almost 30% of all existing “transit assets” are in “poor or marginal condition.”

    Ultimately we need to ask what constitutes transit’s primary mission: to carry more people to work or to reshape our metropolitan areas for ever denser development. As opposed to buses, which largely serve those without access to cars, light rail lines are often aimed at middle-class residents who would also be potential buyers of high-density luxury housing. In this sense, light rail constitutes a critical element in an expanded effort to reshape the metropolis in a way preferred by many new urbanists, planners and urban land speculators.

    The problem facing these so-called visionaries lies in the evolving nature of the workplace in most parts of the country, where jobs, outside of government employment, are increasingly dispersed. Given these realities, transit agencies should be looking at innovative ways to reach farther to the periphery, in part to provide access to inner-city residents to a wider range of employment options. Considering more than 80% of all commuter trips are between areas outside downtown, priority should be given to more flexible, less costly systems such as rapid commuter bus lines, bus rapid transit, as well as subsidized dial-a-ride and jitney services that can work between suburban centers.

    If reducing energy use and carbon emissions remains the goal, much more emphasis should be placed as well on telecommuting. In many cities that have invested heavily in rail transit–Dallas, Denver and Salt Lake City, for example–the percentage of people working from home is now markedly larger than those taking any form of mass transit. Since the approval of the Dallas light rail system in the 1980s, for example, the transit share of work trips has dropped from 4.3% to 2.1%; the work-at-home share has grown from 2.3% to 4.3%.

    In fact, people who work from home now surpass transit users in 36 out of 52 metropolitan areas with populations over 1 million–and receive virtually no financial backing from governments. Yet if New York, home to roughly 40% of the nation’s transit commuters, was taken out of the calculations, at-home workers already outnumber the number of people taking transit to work; and since 2000 their numbers have been growing roughly twice as fast as those of transit riders.

    Clearly we should not spend our ever more scarce transit resources on a nostalgia crusade to make our cities function much the way they did in the late 1800s. Instead, we need to construct systems reflecting the technology and geographic realities of the 21st century and place our primary focus on helping people, particularly those in need, find efficient, economically sustainable ways to get around.

    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: Michael | Ruiz

  • The Golden State’s War on Itself

    California has long been a destination for those seeking a better place to live. For most of its history, the state enacted sensible policies that created one of the wealthiest and most innovative economies in human history. California realized the American dream but better, fostering a huge middle class that, for the most part, owned their homes, sent their kids to public schools, and found meaningful work connected to the state’s amazingly diverse, innovative economy.

    Recently, though, the dream has been evaporating. Between 2003 and 2007, California state and local government spending grew 31 percent, even as the state’s population grew just 5 percent. The overall tax burden as a percentage of state income, once middling among the states, has risen to the sixth-highest in the nation, says the Tax Foundation. Since 1990, according to an analysis by California Lutheran University, the state’s share of overall U.S. employment has dropped a remarkable 10 percent. When the state economy has done well, it has usually been the result of asset inflation—first during the dot-com bubble of the late 1990s, and then during the housing boom, which was responsible for nearly half of all jobs created earlier in this decade.

    Since the financial crisis began in 2008, the state has fared even worse. Last year, California personal income fell 2.5 percent, the first such fall since the Great Depression and well below the 1.7 percent drop for the rest of the country. Unemployment may be starting to ebb nationwide, but not in California, where it approaches 13 percent, among the highest rates in the nation. Between 2008 and 2009, not one of California’s biggest cities outperformed such traditional laggards as New York, Pittsburgh, and Philadelphia in employment growth, and four cities—Los Angeles, Oakland, Santa Ana, and San Bernardino–Riverside—sit very close to the bottom among the nation’s largest metro areas, just slightly ahead of basket cases like Detroit. Long a global exemplar, California is in danger of becoming, as historian Kevin Starr has warned, a “failed state.”

    What went so wrong? The answer lies in a change in the nature of progressive politics in California. During the second half of the twentieth century, the state shifted from an older progressivism, which emphasized infrastructure investment and business growth, to a newer version, which views the private sector much the way the Huns viewed a city—as something to be sacked and plundered. The result is two separate California realities: a lucrative one for the wealthy and for government workers, who are largely insulated from economic decline; and a grim one for the private-sector middle and working classes, who are fleeing the state.

    Graph by Alberto Mena.

    The old progressivism began in the early 1900s and lasted for half a century. It was a nonpartisan and largely middle-class movement that emphasized fostering economic growth—the progressives themselves tended to have business backgrounds—and building infrastructure, such as the Los Angeles Aqueduct and the Hetch Hetchy Reservoir. One powerful progressive was Republican Earl Warren, who governed the state between 1943 and 1953 and spent much of the prospering state’s surplus tax revenue on roads, mental health facilities, and schools. Another was Edmund G. “Pat” Brown, elected in 1958, who oversaw an aggressive program of public works, a rapid expansion of higher education, and the massive California Water Project.

    But by the mid-1960s, as I noted in an essay in The American two years ago, Brown’s traditional progressivism was being destabilized by forces that would eventually transform liberal politics around the nation: public-sector workers, liberal lobbying organizations, and minorities, which demanded more and more social spending. This spending irritated the business interests that had formerly seen government as their friend, contributing to Brown’s defeat in 1966 by Ronald Reagan. Reagan was far more budget-conscious than Brown had been, and large declines in infrastructure spending occurred on his watch, mostly to meet a major budget deficit.

    The decline of progressivism continued under the next governor: Pat Brown’s son, Edmund G. “Jerry” Brown, Jr., who took office in 1975. Brown scuttled infrastructure spending, in large part because of his opposition to growth and concern for the environment. Encouraged by “reforms” backed by Brown—such as the 1978 Dill Act, which legalized collective bargaining for them—the public-employee unions became the best-organized political force in California and currently dominate Democrats in the legislature (see “The Beholden State,” Spring 2010). According to the unions, public funds should be spent on inflating workers’ salaries and pensions—or else on expanding social services, often provided by public employees—and not on infrastructure or higher education, which is why Brown famously opposed new freeway construction and water projects and even tried to rein in the state’s university system.

    The power of the public-employee lobby would come to haunt the recall-shortened gubernatorial reign of Gray Davis, Brown’s former chief of staff. The government workers’ growing demands on the budget, green groups’ opposition to expanding physical infrastructure, and Republican opposition to tax increases made it impossible for either Davis or his successor, Arnold Schwarzenegger, to expand the state’s infrastructure at a scale necessary to accommodate its growing population.

    The new progressives were as unenthusiastic about welcoming business as about building infrastructure. Fundamentally indifferent or even hostile to the existing private sector, they embraced two peculiar notions about what could sustain California’s economy in its place. The first of these was California’s inherent creativity—a delusion held not only by liberal Democrats. David Crane, Governor Schwarzenegger’s top economic advisor, once told me that California could easily afford to give up blue-collar jobs in warehousing, manufacturing, or even business services because the state’s vaunted “creative economy” would find ways to replace the lost employment and income. California would always come out ahead, he said, because it represented “ground zero for creative destruction.”

    Graph by Alberto Mena.

    The second engine that could supposedly keep California humming was the so-called green economy. Michael Grunwald recently wrote in Time, for example, that venture capital, high tech, and, above all, “green” technology were already laying the foundation of a miraculous economic turnaround in California. Though there are certainly opportunities in new energy-saving technologies, this is an enthusiasm that requires some serious curbing. One recent study hailing the new industry found that California was creating some 10,000 green jobs annually before the recession. But that won’t heal a state that has lost 700,000 jobs since then.

    At the same time, green promoters underestimate the impact of California’s draconian environmental rules on the economy as a whole. Take the state’s Global Warming Solutions Act, which will force any new development to meet standards for being “carbon-neutral.” It requires the state to reduce its carbon-emissions levels by 30 percent between 1990 and 2020, virtually assuring that California’s energy costs, already among the nation’s highest, will climb still higher. Aided by the nominally Republican governor, the legislation seems certain to slow any future recovery in the suffering housing, industrial, and warehousing sectors and to make California less competitive with other states. Costs of the act to small businesses alone, according to a report by California State University professors Sanjay Varshney and Dennis Tootelian, will likely cut gross state product by $182 billion over the next decade and cost some 1.1 million jobs.

    It’s sad to consider the greens such an impediment to social and economic health. Historically, California did an enviable job in traditional approaches to conservation—protecting its coastline, preserving water and air resources, and turning large tracts of land into state parks. But much like the public-sector unions, California’s environmental movement has become so powerful that it feels free to push its agenda without regard for collateral damage done to the state’s economy and people. With productive industry in decline and the business community in disarray, even the harshest regulatory policies often meet little resistance in Sacramento.

    In the Central Valley, for instance, regulations designed to save certain fish species have required 450,000 acres to go fallow. Unemployment is at 17 percent across the Valley; in some towns, like Mendota, it’s higher than 40 percent. Rick Wartzman, director of the Peter Drucker Institute, has described the vast agricultural region around Fresno as “California’s Detroit,” an area where workers and businesspeople “are fast becoming a more endangered species than Chinook salmon or delta smelt.” The fact that governments dominated by “progressives” are impoverishing whole regions isn’t merely an irony; it’s an abomination.

    So much for the creative green economy. As for the old progressives’ belief that government shouldn’t scare away productive, competitive, long-term enterprise, that, too, has been abandoned by their successors. “Our economy is not inducing the right kind of business,” says Larry Kosmont, a prominent business consultant in Los Angeles. “It’s too expensive to operate here, and managers feel squeezed. They feel they can’t control the circumstances any more and have to look somewhere else.” The problem isn’t just corporate costs, either. The regulatory restraints, high taxes, and onerous rules enacted by the new progressives lead to high housing prices, making much of California too expensive for middle- and working-class employees and encouraging their employers to move elsewhere.

    Silicon Valley, for instance—despite the celebrated success of Google and Apple—has 130,000 fewer jobs now than it had a decade ago, with office vacancy above 20 percent. In Los Angeles, garment factories and aerospace companies alike are shutting down. Toyota has abandoned its Fremont plant. California lost nearly 400,000 manufacturing jobs between 2000 and 2007, according to a report by the Milken Institute—even as industrial employment grew in Texas and Arizona. A sign of the times: transferring factory equipment from the Bay Area to other locales has become a thriving business, notes Tom Abate of the San Francisco Chronicle.

    Optimists sometimes point out that “new economy” companies like Disney, Google, Hewlett-Packard, and Apple, as well as scores of smaller innovative firms, continue to keep their headquarters in the state. But this is to ignore the fact that many of these companies are sending their middle- and working-class employees to other locales. Evidence of middle-class flight: since 1999, according to California Lutheran University, the state has seen a far steeper decline in households earning between $35,000 and $75,000 than the national average. And blue-collar areas—Oakland, the eastern expanses of greater Los Angeles, and much of central California—have been hit even harder. California’s overall poverty rate has been consistently higher than the national average. In Los Angeles County alone, some 20 percent of the population—2.2 million people—receives some form of public aid.

    Graph by Alberto Mena.

    In short, the economy created by the new progressives can pay off only those at the peak of the employment pyramid—top researchers, CEOs, entertainment honchos, highly skilled engineers and programmers. As a result, California suffers from an increasingly bifurcated social structure. Between 1993 and 2007, the share of the state’s income that went to the top 1 percent of earners more than doubled, to one-quarter—the eighth-largest share in the country.

    For these lucky earners, a low-growth or negative-growth economy works just fine, so long as stock prices rise. For their public-employee allies, the same is true, so long as pensions remain inviolate. Global-warming legislation may drive down employment in warehouses and factories, but if it’s couched in rhetoric about saving the planet, these elites can even feel good about it.

    Under the new progressives, it’s always hoi polloi who need to lower their expectations. More than four out of five Californians favor single-family homes, for example, but progressive thinkers like Robert Cruickshank, writing in California Progress Report, want to replace “the late 20th century suburban model of the California Dream” with “an urban, sustainable model that is backed by a strong public sector.” Of course, this new urban model will apply not to the wealthy progressives who own spacious homes in the suburbs but to the next generation, largely Latino and Asian. Robert Eyler, chair of the economics department at Sonoma State University, points out that wealthy aging yuppies in Sonoma County have little interest in reviving growth in the local economy, where office vacancy rates are close to those in Detroit. Instead, they favor policies, such as “smart growth” and an insistence on “renewable” energy sources, that would make the area look like a gated community—a green one, naturally.

    Graph by Alberto Mena.

    California’s supposedly progressive economics have had profound demographic consequences. After serving as a beacon for millions of Americans, California now ranks second to New York—and just ahead of New Jersey—in the number of moving vans leaving the state. Between 2004 and 2007, 500,000 more Americans left California than arrived; in 2008, the net outflow reached 135,000, much of it to the very “dust bowl” states, like Oklahoma and Texas, from which many Californians trace their origins. California now has a lower percentage of people who moved there within the last year than any state except Michigan. Even immigration from abroad seems to be waning: a recent University of Southern California study shows the percentage of Californians who are foreign-born declining for the first time in half a century. For the first time in its history as a state, as political analyst Michael Barone has noted, California is not on track to gain a new congressional district after the 2010 census.

    This demographic pattern only reinforces the hegemony of environmentalists and public employees. In the past, both political parties had to answer to middle- and lower-middle-class voters sensitive to taxes and dependent on economic growth. But these days, with much of the middle class leaving, power is won largely by mobilizing activists and public employees. There is little countervailing pressure from local entrepreneurs and businesses, which tend to be poorly organized and whose employee base consists heavily of noncitizens. And the legislature’s growing Latino caucus doesn’t resist regulations that stifle jobs—perhaps because of the proliferation of the California equivalent of “rotten boroughs”: Latino districts with few voters where politicians can rely on public employees and activists to dominate elections.

    Blessed with resources of topography, climate, and human skill, California does not need to continue its trajectory from global paragon to planetary laughingstock. A coalition of inland Latinos and Anglos, along with independent suburban middle-class voters in the coastal areas, could begin a shift in policy, reining in both public-sector costs and harsh climate-change legislation. Above all, Californians need to recognize the importance of the economic base—particularly such linchpins as agriculture, manufacturing, and trade—in reenergizing the state’s economy.

    The changes needed are clear. For one thing, California must shift its public priorities away from lavish pensions for bureaucrats and toward the infrastructure critical to reinvigorating the private sector. The state’s once-vaunted power system routinely experiences summer brownouts; water supplies remain uncertain, thanks to environmental legislation and a reluctance to make new investments; the ports are highly congested and under constant threat of increased competition from the southeastern United States, the Pacific Northwest, and eventually Mexico’s Baja California. Fixing these problems would benefit the state’s middle and working classes. Lower electrical costs would help preserve industrial facilities—from semiconductor and aerospace plants to textile mills. Reinvestment in trade infrastructure, such as ports, bridges, and freeways, would be a huge boon to working-class aspirations, since ports in Southern California account for as much as 20 percent of the area’s total employment, much of it in highly paid, blue-collar sectors.

    Another potential opportunity lies in energy, particularly oil. California has enormous reserves not just along its coast but also in its interior. The Democrats in the legislature, which seems determined to block expanded production, have recently announced plans to increase taxes on oil producers. A better solution would be a reasonable program of more drilling, particularly inland, which would create jobs and also bring a consistent, long-term stream of much-needed tax revenue.

    These shifts would likely appeal to voters in the areas—such as the Central Valley and the “Inland Empire” around Riverside—that have been hurt most by the recession and the depredations of the hyper-regulatory state. Indeed, the disquiet in the state’s interior could make the coming gubernatorial election the most competitive in a decade. Jerry Brown, the Democratic candidate, certainly appears vulnerable: his campaign is largely financed by the same public-sector unions whose expansion he fostered as governor; more recently, serving as state attorney general, he was the fiercest enforcer of the Global Warming Solutions Act, which opens him to charges that he opposes economic growth. One hopeful sign that pragmatism may be back in fashion: a new proposed ballot measure to reverse the act until unemployment drops below 5.5 percent, where it stood before the recession. Since unemployment is currently near 13 percent, that would take radical change off the table for quite a while.

    Still, it isn’t certain that California’s inept and often clueless Republicans will mount a strong challenge. For them to do so, business leaders need to get back in the game and remind voters and politicians alike of the truth that they have forgotten: only sustained, broadly based economic growth can restore the state’s promise.

    This article originally appeared at The City Journal.

    Thanks to the Economic Research and Forecasting Project at California Lutheran University for providing analysis and charts.

    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: Stuck in Customs

  • Alaska: Caribou Commons Or America’s Lost Ace?

    The most serious collateral damage from the BP spill disaster could very likely be in the far north, along the Alaskan coast. The problem is not a current spill but the Obama administration’s ban on offshore drilling and what many fear may be a broader attempt to close the state from further resource-related development.

    Such an approach could harm both the local and national economies for decades to come.

    Locking up of this vast northern state–which is home to some 700,000 people and has more coastline than the rest of “lower 48″combined–would be tantamount to the U.S. throwing away a strategic ace in the hole. Alaska contains many of the strategic assets–oil, zinc, lead, gold and, perhaps most critically, rare earth metals–critical in the increasingly multipolar battle for global prosperity.

    The move by some in the administration and green activists to freeze the last frontier recalls Frank and Mary Popper’s proposal to turn the Great Plains into a “buffalo commons” for wildlife, Native Americans and grasslands. In this case, this new Alaska could be labeled “the caribou commons.”

    By now it’s clear that the Great Plains region has value well beyond accommodating vast herds of bison, which have indeed been expanding. According to a recent Portfolio.com survey, four states either completely or partially in the Plains–North Dakota, Texas, South Dakota and Nebraska–rank among the top six states in economic performance.

    Alaska–buoyed in large part by energy production and its spinoffs–ranked second on the list, its residents doing far better than those in what the locals call “the outside.” Yet for all its wealth, Alaska has a peculiar challenge that stems from the fact that the vast majority of its land is owned by the federal government.

    Right now oil drilling represents the most important and contentious issue. Sixteen billion barrels of the black tea have come out of the North Slope alone since the 1980s, more than originally expected. An estimated 56 billion additional barrels exist, much of it in coastal waters.

    For decades, oil has driven Alaska’s prosperity. Before the discovery of the Prudhoe Bay field in 1967, Alaska suffered a per-capita income some 20% below the national average. Today it ranks eighth.

    Roughly 100,000 Alaskans work for energy companies, either directly or indirectly. Jobs in the oilfields, as well as the mines, pay an average of between $70,000 and $100,000 a year. These industries have helped it rise as one of the national leaders in producing good middle-class, blue-collar jobs.

    University of Alaska economist Scott Goldsmith estimates that oil accounts for two-thirds of the state’s growth since it became a state in 1959. Just eliminating the vast fields on Prudhoe Bay tomorrow, he estimates, would wipe out roughly one-third of all the state’s jobs. Oil-related taxes account for roughly 84% of the state’s total revenues.

    Alaska has other industries, such as tourism and fishing, but these pay far lower average wages than energy. “Without oil, we are essentially a third-world country,” notes Dan Sullivan, mayor of Anchorage, home to nearly half the state’s population.

    Not surprisingly, many Alaskans believe a ban on new energy and mining projects would end their relative prosperity. Goldsmith, for one, envisions the state turning into something akin to Maine (ranked 30th in per-capita income), a tourism-dominated playground for the visiting rich scarred by grinding poverty.

    Already oil-fueled revenues that fund government employment have fallen dramatically. Since its peak in 1988 oil flowing through the Alaska pipeline has dwindled from 2 million barrels a day to barely 700,000. This total could fall to under 600,000 by 2018.

    Without the development of new fields, Alaska, which now enjoys the country’s largest rainy day fund, could face a huge fiscal crisis. According to recent University of Alaska estimates, the state could confront California-style insolvency within a decade or two.

    Of course, most Alaskans do not want to see energy–or mining–expanded without strenuous controls. Many of them live in this isolated, often brutally cold place in order to enjoy its natural splendor and bounty. Climate change–irrespective to this summer’s chilly weather–also is a wide concern among people who live adjacent to retreating glaciers and worry about depleting arctic fisheries.

    Yet if Alaskans passionately want to preserve their staggeringly beautiful environment, they also are unlikely to embrace a vision of pristine poverty. Having suffered the depredations of international energy, mining or fishery companies, they also are not anxious to leave their fate to the Environmental Protection Agency or litigation-happy, trust-fund groups such as the Center for Biological Diversity.

    “A lot of people in the lower 48 [states] want us to pay for their sins,” suggests Alaska Sen. Con Bunde, reflecting a widely felt sentiment. “They may never come to Alaska, but knowing it’s there keeps them warm inside at night.”

    To protect their economy, Alaskans will need to learn new skills. For a generation they relied on powerful, now retired longtime Sen. Ted Stevens to protect their industries and make them the largest per-capita beneficiaries of federal largesse.

    Best suited for this role are the powerful Alaska-based, native-owned corporations. Unlike the oil companies run from Dallas, Houston or London, these companies are locally rooted. Together the top 13 native-owned firms possess some $4 billion in assets, a billion-dollar payroll and 12% of the state’s land.

    Taking control of their destiny may also mean changing attitudes common in a society that combines the most rugged individualism with what many call “an entitlement mentality.” After all, this is a place where big oil pays most of the bills and every individual receives an $1,300 annual check from the energy-funded Personal Dividend Fund. “The typical Alaskan doesn’t give a damn about what happens as long as they get their PDF check,” observes Dan Robinson, an economist with the McDowell Group, a local consulting firm.

    To maintain its long-term prosperity, Alaska needs to shift from petro-welfare to investing its energy wealth in the growth and diversification of its key industries. The state, for example, has huge potential for wind, geothermal and tidal production and should be a hub for both new fossil fuel technology as well. It also can use its locale on a key Pacific trade route as a center for advanced logistics (Anchorage Airport carries the world’s fifth-largest cargo tonnage).

    The rest of the country also has a big stake in the fate of America’s Far North. Lost production of energy and mineral resources would make us more dependent on other, often unfriendly countries. With exploration shifting to far less environmentally sensitive places like Mongolia or Africa, you also can count on greater net ecological damage as well.

    Alaska’s concerns may seem remote those in the “lower 48.” But how the 49th state fares may determine whether the rest of America can build a more sustainable and prosperous economy in the decades ahead.

    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: Unhindered by Talent

  • A New War Between The States

    Nearly a century and half since the United States last divided, a new “irrepressible conflict” is brewing between the states. It revolves around the expansion of federal power at the expense of state and local prerogatives. It also reflects a growing economic divide, arguably more important than the much discussed ideological one, between very different regional economies.

    This conflict could grow in the coming years, particularly as the Obama administration seeks to impose a singular federal will against a generally more conservative set of state governments. The likely election of a more center-right Congress will exacerbate the problem. We may enter a golden age of critical court decisions over the true extent of federal or executive power.

    Some states are already challenging the constitutionality of the Obama health care program. Indiana, North Dakota, Mississippi, Nevada and Arizona joined a suit on March 23 by Florida Attorney General Bill McCollum to overturn the law. And Arizona’s right to make its own pre-immigration regulations has gained support from nine other states: Texas, Alabama, Florida, Nebraska, Pennsylvania, South Carolina, South Dakota, Michigan and Virginia.

    These may be just the opening salvos. If the Republicans and conservative Democrats gain effective control of Congress, the White House may choose to push its agenda through the ever expanding federal apparat. This would transform a policy dispute into something resembling a constitutional crisis.

    Such legal kerfuffles are unlikely to serve as precursors to armed conflict. But the political and rhetorical battles will certainly be heated. The federalistas can take heart from the the Civil War of a century and a half ago, which was decisively won by the union. They can also gain some encouragement from the ultimate success of the New Deal and of World War II.

    The federal government’s greatest bragging right–ending the absolute evil of slavery–was secured during the last war between the states. While most Union soldiers may have gone to war for the Union, the final result was an end to slavery. The consolidation of that gain during the 1960s also rests on expanded federalism.

    But the Civil War also was, as Karl Marx observed, a conflict between powerful economic interests. The Southern economy depended heavily on the export of commodities–primarily cotton, but also tobacco and other foodstuffs. It enjoyed profitable trading ties with the capitalistic superpower of the time, Great Britain. The North, in contrast, was an emerging industrial power for whom the British Empire represented the prime competitor.

    After the war the industrial capitalists ran the country virtually unchallenged. They overcame the Southern commodity producers politically and burdened them with high tariffs. By the 1890s American manufacturing surpassed Great Britain. The North became relatively rich while the South and much of the West remained backwaters until the 1950s.

    The economic map looks very different today. Generally speaking, states in relatively good economic shape are concentrated in an economic “zone of sanity” across the vast Great Plains. They are also in the least “fiscal peril,” according to a recent Pew study. Not surprisingly, these states see little reason to extend federal power and increase taxation in order to bail out their more profligate counterparts.

    To a large extent these states, according to Pew, are also the ones willing to reform their pension and other spending to keep down costs. Significantly, strong pension reforms have been enacted in some hard-hit sunbelt states–such as Nevada, Georgia, New Mexico and Arizona–which appear to be following the fiscal model of the zone-of-sanity states.

    In contrast those states most favorable to a more powerful Washington are often the ones suffering the worst fiscal situations. They also seem least willing to solve their structural budget issues. Free-spending, poorly managed states like New York, California, Michigan, Oregon and Illinois–all of which are controlled by the president’s political allies, need massive federal largesse to pay their bills without ruinous tax increases or painful cuts. Some localities in these states could become the Greeks of late 2010 as they head inexorably toward defaults.

    The differences between the states, however, extend beyond budget items. Many of the worst-managed also benefit from more federal spending on academic and medical research, and from subsidies for their often expensive green energy policies. They can also argue, with some justification, that the zone-of-sanity states have benefited in the past from federal crop supports, military spending and highway funding. Now it’s their turn for disproportionate time at the trough.

    Perhaps the most divisive issue will be the Obama administration’s proposed “cap and trade” legislation. For the most part, the strongest opposition comes from coal-dependent, industrial heartland states such as Indiana, whose governor, Mitch Daniels, has denounced the legislation as “imperialism” from Washington. Other keen opposition can be expected among members in both parties from energy-producing states like West Virginia, Texas, Louisiana, Oklahoma, North Dakota, Alaska and Wyoming.

    In contrast “cap and trade” seems less of a problem to the rapidly deindustrializing coastal states. Many of these states pride themselves as exemplars of an emerging low-carbon “information economy” and seem determined to limit their gas-spewing sectors like agriculture, manufacturing and transportation. A strong federal mandate on carbon emissions also would diminish the competitive gap between states like California, burdened by draconian local climate change policies, and less restrictive places like Texas.

    So who is likely to win the emerging new war between the states? Federal partisans might paint their opponents as the new “Confederates” fighting a protracted rear guard action, this time against science and social enlightenment. Certainly some demographic trends–youth attitudes on environmental issues, growing ethnic diversity and urbanization of “rural” states–favor the unionists.

    Yet you can argue that the fiscally strong states will be better positioned for the future. In contrast to the mid-19th-century Confederates, whose population growth paled compared with the Northern states, many of today’s demographic trends favor the anti-federalists.

    Over the past decade America’s population and enterprises have been shifting away from the unionist strongholds. Once depopulating states like Kentucky and the Dakotas are enjoying net in-migration from the rest of the country. Texas gradually threatens to supplant California as the leading destination for the young and ambitious.

    This suggests that after the 2010 census we could see something of a neo-confederate majority in Congress. Historical patterns may be repeating themselves, but they could produce a very different final result.

    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: Marxchivist

  • Tribes And Trust

    Only Tribes held together by a group feeling can survive in a desert.
    –Ibn Khaldun, 14th century Arab historian

    Time to chuck into the dustbin the cosmopolitan notions so celebrated at global conferences: a world run by wise men of the United Nations, science-driven socialists or their ostensibly more pragmatic twins, global free marketers. We are leaving the age of abstractions and entering one dominated by deep-seated ethnic, religious and cultural loyalties, some with roots from centuries and millennia ago.

    The 14th century Arab historian Ibn Khaldun noted that what most holds people together is biology and shared history. These create the critical bonds of kinship and trust and a sense of common purpose that have animated every ascendant group from the days of the Greeks and Romans through the British empire, America and modern day China.

    You rarely hear such notions discussed by academics, policy wonks and politicians. The well-behaved shy away from the hoary reality that people usually put the interests of their extended family ahead of others.

    Yet the more we struggle to be true cosmopolitans, the more humanity expresses our fundamentally tribal nature. In the two decades since I wrote my book Tribes, in-group loyalties appear to have become stronger and more dominant.

    Take the Arabs, Ibn Khaldun’s own tribe, now blending ethnic nationalism and religion into a powerful, epoch-shaping mixture. Much as in the 7th or 8th centuries.

    Arab Muslim tribalism will remain a powerful force, if for no other reason than their dominance of easily accessible fossil fuel resources. You see signs of a renewed, self-conscious Arab civilization in the new mosques, shining cultural edifices, mega-hotels and office spires sprouting across Kuwait, Dubai, Qatar and Abu Dhabi.

    With Arabs, like others, intense tribal feelings can often get out of control. Racial pride and religious fervor have chased many productive cultural minorities–Armenians, Christians, Jews–from once cosmopolitan cities like Damascus, Cairo and Beirut. The Shiite Iranians have followed a similar unfortunate course. Even some in Israel feel an uncontrollable urge to exclude, as evident in a proposal to allow ultra-orthodox Haredi rabbis to determine who is–and who isn’t–a Jew.

    The power of the new tribalism is particularly evident among the Chinese. Maoism might have been a radical internationalist movement, but today’s Chinese are seeking to revive the great 15th century “middle kingdom” that led the world in industriousness and commerce, and briefly even “ruled the seas.”

    The Han are easily the world’s largest tribe with a common history, language and mythology, and they constitute over 90% of China’s billion-plus population. In contrast, India, the other great rising super power of our time, remains a patchwork of diverse ethnic, linguistic, caste and religious groupings.

    The new Middle Kingdom, as Martin Jacques warns in his influential When China Rules the World, may well prove extraordinarily ethno-centric and self-referential. The newly powerful Han may find little use for other races except as customers and suppliers of raw materials.

    Despite huge internal pressures, the Chinese are increasingly scornful of the Western business model. A good example of this change of mood: the downgrade of American and European debt by the Dagong rating agency earlier this month.

    Other tribes, meanwhile, are waning: Take the Japanese. The Japanese ascendency last century was was built upon imagination, courage and military, followed by a corporate, esprit de corps.

    Nothing speaks to tribal decline more than Japan’s shocking birth dearth. The Japanese are running out of new blood about as quickly as any nation on earth. They also seem constitutionally incapable of making the demographic shortfall with immigrants. By 2050 more than one in three Japanese will be over 60, and the workforce 40% smaller than in 2000. The same fate may await some of their Asian cousins, but Japan’s demographic time bomb will go off first.

    Europeans face similarly bleak demographic prospects. Many traditional linchpins of trust–national pride, family and religion–have weakened. Lacking some sort of “group feeling,” today’s Europeans seem unmotivated about creating a great future, as shown by their unwillingness to start businesses or create offspring.

    The trendy concept of “European” may also need to be dismissed as archaic given the mounting rift between the frugal and productive north and the anarchic south. After all, how can you speak of one Europe when the Belgians themselves remain congenitally divided between their French and Dutch speakers.

    So what other tribes, besides the Chinese, are on the upswing? Best look at the arc of rising countries across Asia–from Turkey and India to Vietnam. All appear to be entering an aggressive, expansive phase.

    The new dynamic has restored one historic aspect in the role of cities as hosts for a gathering of tribes. Singapore, for example, has evolved into a modern-day Venice: a convenient, authoritatively ordered place hosting Chinese, Malays, Indians, Vietnamese and those Westerners who want in on Asia’s action.

    Many well off Indians, Chinese and others scour the globe for the prospect of a better life–easier admission to college or the prospect of owning a large flat or even a single family house in the suburbs. This lures them to London, New York, Los Angeles, the Bay Area or Houston. Chinese yuppies still fork out big bucks to have their babies born in California.

    Tribalism has spread even to that paragon of modernism, Silicon Valley. In the end, technology often fails to trump family and cultural ties. Chinese investors push firms to set up shop with their ethnic compatriots in Taiwan, Singapore or China; the Indians for Bangalore, Chennai or Hyderabad; the Israelis for expanding Tel Aviv.

    In our informational age, of course, not all trust networks are based on ethnic DNA. The Mormons have thrived as a tribe based on theology and their remarkable culture of mutual self-help. More than half of the “Saints” now live outside of America, but still Salt Lake City serves as their own ecclesiastical Mecca.

    Even decidedly secular groups increasingly display tribal characteristics. Green activists are united by a passionate “group feeling” as powerful as that which mobilized Mohammed’s followers; just substitute “sustainable” for holy.

    Smaller tribes like investment bankers, techno-geeks or gays each share their own iconography, rites of passage, tastes in politics and culture. They cluster not only in cyberspace, but in the same neighborhoods, conferences and resorts, and increasingly intermarry.

    These secular tribes often insist they, unlike ethnic groups, are motivated by a more enlightened spirit of science, global consciousness or individual self-awareness. But don’t be taken in by such protestations. Nothing could be more tribal.

    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: TwOsE

  • We Trust Family First

    Americans, with good reason, increasingly distrust the big, impersonal forces that loom over their lives: Wall Street, federal bureaucracy, Congress and big corporations. But the one thing they still trust is that most basic expression of our mammalian essence: the family.

    Family ties dominate our economic life far more than commonly believed. Despite the power of public companies, family businesses control roughly 50% of the country’s gross domestic product, according to the research firm Gaebler.com. Some 35% of the Fortune 500 are family businesses, but so too are the vast majority of smaller firms. Family companies represent 60% of the nation’s employment and almost 80% of all new jobs.

    And despite the glowering about impersonal corporate agriculture and the overall decline in the number of farms since the 1950s, almost 96% of the 2.2 million remaining farms are family-owned. Even among the largest 2% of farms, 84% are family-owned. The recent surge in smaller, specialized farming may actually increase this percentage in the future.

    Family life also often determines the economic success of individuals–something widely understood since the controversial 1965 Moynihan Report linked poverty among African-Americans to the decline of intact family units. Today more than half of black children live in households with a single mother, a number that has doubled since the 1960s, and they are much more likely to live in poverty than non-blacks. When you consider intact African-American families the so-called “racial gap” diminishes markedly.

    The confluence between upward mobility and strong family networks remains extraordinary not only among African-Americans but among all groups. Only 6% of married-couple families live in poverty, and most of them, like previous generations of newcomers, are likely to climb out of that state. “Families,” suggests Nobel Prize-winning economist James Heckman, “are the major source of inequality in American social and economic life.”

    The critical importance of family runs against the mindset of pundits, corporate marketers and planners. Starting with Vance Packard’s 1972 bestseller A Nation of Strangers, Americans have been sold the notion of a more atomized, highly individualized future. Similar alarms have been issued both on the left, from the late Jane Jacobs, and by conservative observers, like Francis Fukuyama and William Bennett.

    Yet despite these predictions, our mammalian instinct to trust family first has remained very strong. Some 90% of Americans, notes social historian Stephanie Coontz, consider their parental relations close.

    This back-to-family trend has been building for at least a decade. For example, over the past 30 years the percentage of households with more than one generation of adults has grown and now stands at the highest levels since the mid-1950s. Meanwhile the once irrepressible growth of single-family households has begun to slow down, and has even dropped among those over 65. Meanwhile the numbers of adults aged 25 to 39 living with their parents jumped 32% between 2000 and 2008, before the full impact of the recession; the increase in single-centric Manhattan, notes The New York Times’ Sam Roberts, was nearly 40%.

    Unlike the typically “nuclear” families of the mid-20th century, the current crop, much like earlier generations of American families, tend to be more “blended.” In its contemporary form this includes same-sex partners, uncles, aunts, grandparents and stepparents.

    Today childrearing extends beyond the biological parents and is often shared by divorced parents, their new spouses and other family members. Grandparents and other relatives help provide care for roughly half of all preschoolers, something that has not changed significantly over time and is unlikely to do so in the future. This is even true in the Obama White House, where Marian Robinson, the First Lady’s mother, has moved in to help raise the couple’s two children.

    Of course, some still celebrate the purported demise of the family unit to support various feminist, green or dense urbanist agendas. They point out with enthusiasm that barely one in five households consists of a married couple with children living at home, even though these households account for more than one-third of the total population ,according to the Census. Yet they miss one critical point: Parents usually continue to care for and be deeply involved with their offspring even after they leave the nest.

    When people move somewhere, for instance, they tend not to do so because it is closer to their favorite jazz club or a Starbucks or even because they would get a better job–instead, their main motivation for moving is to be closer to kin. Family, as one Pew researcher notes, “trumps money when people make decisions about where to live.”

    These nesting patterns are being further buttressed by hard times. People who might have struck out on their own are staying close to home–if not at home.

    Last year Pew reported that some 10% of people under 35 moved back in with their parents. Pressed by the bad economy, the number of adults 18 to 29 who lived alone dropped from nearly 8% in 2007 to 7.3%. People are less likely to form new households in tough times.

    Similarly if people are looking to start a business, they are more likely to do so within the family. In a time of constricted credit from banks, Pew also reports a growing dependence on family members for loan. In bad times, who else can you trust besides your kin?

    Of course, the very affluent can afford to have it all–easy credit, a country house and ease of travel between their “places.” But for the middle and working classes, family ties often trump all other considerations. Real estate agent Judy Markowitz, once explained to me that being close to parents remained the primary motivation for young people staying in neighborhoods like Bayside or Middle Village in Queens, N.Y. “In Manhattan they have nannies,” she explained. “In Queens we have grandparents.”

    These basic trends are not likely to be reversed once the economy recovers. For one thing, our increasingly non-white populations remain very committed to inter-generational living; over 20% of African-Americans, Asians and Latino households–compared with 13% of whites–live in such households. Many minorities, particularly immigrants, also often tend to own small family businesses, which rely on credit and labor from extended family networks.

    And then we have to consider the new generation. The millennials, note researchers Morley Winograd and Michael Hais, are very family-oriented. Indeed three-quarters of 13-to-24-year-olds, according to one 2007 survey, consider time spent with family the greatest source of their own happiness, rating it even higher than time spent with friends or a significant other. More than 80% think getting married will make them happy, and some 77% say they definitely or probably will want children.

    Anyone looking into the future of the country’s economy cannot do so without considering the continued importance of the family. Americans’ most important decisions–where to move, what to buy, whether to have children–will continue to revolve largely around the one institution most can still trust: the family.

    This article 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. 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: driki

  • How Obama Lost Small Business

    Financial reform might irk Wall Street, but the president’s real problem is with small businesses—the engine of any serious recovery. Joel Kotkin on what he could have done differently.

    The stock market, with some fits and starts, has surged since he’s taken office. Wall Street grandees and the big banks have enjoyed record profits. He’s pushed through a namby-pamby reform bill—which even it’s authors acknowledge is “not perfect”—that is more a threat to Main Street than the mega-banks. And yet why is Barack Obama losing the business community, even among those who bankrolled his campaign?

    Obama’s big problems with business did not start, and are not deepest, among the corporate elite. Instead, the driver here has been what you might call a bottom-up opposition. The business move against Obama started not in the corporate suites, but among smaller businesses. In the media, this opposition has been linked to Tea Parties, led by people who in any case would have opposed any Democratic administration. But the phenomenon is much broader than that.

    The one group that has fared badly in the last two years has been the private-sector middle class, particularly the roughly 25 million small firms spread across the country. Their discontent—not that of the loud-mouthed professional right or the spoiled sports on Wall Street—is what should be keeping Obama and the Democrats awake at night.

    Small business should be leading us out of the recession. In the last two deep recessions during the early 1980s and the early 1990s, small firms, particularly the mom and pop shops, helped drive the recovery, adding jobs and starting companies. In contrast, this time the formation rate for new firms has been dropping for months—one reason why unemployment remains so high and new hiring remains insipid at best.

    Here’s one heat-check. A poll of small businesses by Citibank, released in May, found that over three quarters of respondents described current business conditions as “fair or poor.” More than two in five said their own business conditions had deteriorated over the past year. Only 17 percent said they expect to be hiring over the next year.

    It’s not hard to see the reasons for pessimism. Entrepreneurs see bailed-out Wall Street firms and big banks recovering, while getting credit remains very difficult for the little guy. In addition, many small businesses are terrified of new mandates, in energy or health, which makes them reluctant to hire new people. Small banks—not considered “too big to fail”—fear that they will prove far less capable of meeting new regulatory guidelines than their leviathan competitors.

    The small business owners I’ve spoken to—like most of the public—generally don’t seem convinced about the effectiveness of the stimulus, even if the administration claims it helped us avert an economic “catastrophe.” Barely one fourth of voters, according to a recent Rasmussen poll, think it helped the economy.

    Obama’s troubles with the bigger firms are more recent. Initially, President Obama wowed the big rich, leading The New York Times to dub him “the hedge fund candidate.” By the time he won the election, he enjoyed wide support from the Business Roundtable, the Silicon Valley venture community and other titans.

    Initially, big business was happy with Obama’s stimulus plan, and more or less was ready to acquiesce to both his health-care reforms and cap and trade. After all, most large companies generally provide some health coverage to their employees. For Wall Street, cap and trade represents just one more wonderful way to arbitrage their way to more profits.

    Of course, some corporate titans will remain loyal to the White House. Take the lucky folks from Spanish- based Abengoa Solar, who are now getting $1.45 billion in federal loan guarantees for an Arizona solar plant that will create under 100 permanent jobs while providing expensive, subsidized energy to perhaps 70,00 homes. If this is stimulus, it’s less jarring than a decaf from Starbucks. Also let’s dismiss those on Wall Street who whine about the administration’s occasionally tough anti-business rhetoric. Wolves should have thicker skins. The Obama administration and Congress have delivered softball financial reform dressed up as major progressive change. They should be grateful, not petulant.

    But there’s clearly something more serious than hurt feelings at play here. The pain felt by small businesses is hitting the big boys, too. After three straight bad years, small businesses buy a lot less stock, business services, and equipment. Big companies can hoard their money and sport big profits, but ultimately they have to sell to consumers and small firms. Maybe that’s something that the media moguls—who after all have to sell to the hoi polloi—have been picking up on, too.

    This has led some Obama allies, like GE’s Jeffrey Immelt, to grouse that Obama does not like business, and vice versa. “Government and entrepreneurs are not in sync,” he explained to reporters in Europe. So, too, has Ivan Seidenberg, the head of the once Obama-friendly Business Roundtable, who denounced the administration recently for creating “an increasingly hostile environment for investment and job creation here in this country.”

    Among businesses of all sizes, there is now a pervasive sense that the administration does not understand basic economics. This is not to say they believe Obama’s a closet socialist, as some more unhinged conservatives claim. That would be an insult to socialism. Obama’s real problem is that he’s a product, basically, of the fantastical faculty lounge.

    For the most part, university professors do not much value economic growth, since they consider themselves, like government workers, a protected class. Many, particularly in planning and environmental study departments, also embrace the views of the president’s academic science adviser, John Holdren, who suggests Western countries undergo “de-development,” which is the opposite of economic growth.

    Of course, such ideas, if taken seriously, have economic consequences. You want to see the future? Come to California, where the regulatory stranglehold is killing our economy. Subsidizing favored interests also is not a winning strategy. There’s simply not enough money to maintain a federal version of Chicago-style baksheesh. The parlous state of Obama’s home state of Illinois—which manages to make even California or New York appear models of prudent management—demonstrates the futility of the subsidize-the-base game.

    The worst part is that none of this was necessary. A stimulus plan that helped workers and communities by recreating a WPA for the unemployed youths might have gained wide support on Main Street. Credits for hiring, reductions in payroll taxes or a regulatory holiday for small firms also might have bolstered business confidence. Business people, particularly at the grassroots level, would also like to see a return for the detested TARP in a freer flow of credit for their firms. They are not so much hostile to Obama as puzzled by his inability to address their needs.

    But for now, the stimulus is widely seen as a wasted opportunity and proof of Washington’s enduring incompetence. As a result, roughly 80 percent of Americans, according to Pew, say they don’t trust the federal government to do the right thing, which does not bode well for a second round of pump-priming.

    This leaves business turning back to the Republicans. Not because most see them as competent or even intelligent; GOP rankings are also at a low ebb. Business owners across the spectrum are forced to embrace the “party of no” because Obama and the Democrats have given them so little to say “yes” to.

    This article 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. 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

  • The Democrats’ Middle-Class Problem

    Class, the Industrial Revolution’s great political dividing line, is enjoying Information Age resurgence. It now threatens the political future of presidents, prime ministers and even Politburo chiefs.

    As in the Industrial Age, new technology is displacing whole groups of people — blue- and white-collar workers — as it boosts productivity and creates opportunities for others. Inequality is on the rise — from the developing world to historically egalitarian Scandinavia and Britain.

    Divisions are evident here in the United States. Throughout the 2008 presidential campaign, Barack Obama lagged in appealing to white middle- and working-class voters who supported Hillary — and former President Bill — Clinton.

    Now, these voters, according to recent polls, are increasingly alienated from the Obama administration. Reasons include slow economic growth, high unemployment among blue- and white-collar workers and a persistent credit crunch for small businesses. These factors could cause serious losses for Democrats this fall — and beyond.

    This discontent reflects long-term trends. Since 1973, for example, the rate of growth of the “typical family’s income” in the United States has slowed dramatically. For men, it has actually gone backward when adjusted for inflation.

    The past few years have been particularly rough. About two in five Americans report household incomes between $35,000 and $100,000 a year. Right now, almost three in five are deeply worried about their financial situation, according to an ABC poll from March.

    This should give Democrats an issue, theoretically. But to date, Obama and his party seem incapable of harnessing the growing middle- and working-class unrest.

    In fact, according to recent polls, these have been the voters that Democrats and the president have been losing over the past year as the economic stimulus failed to make a major dent in unemployment.

    Part of this problem lies with the party’s base, which the urban historian Fred Siegel once labeled “the coalition of the overeducated and the undereducated.” Major urban centers like New York, Chicago and San Francisco might advertise themselves as enlightened, but they have lost much of their middle class and suffer the highest levels of income inequality.

    Representatives from these areas now dominate the party and reflect their bifurcated districts. They often stress the concerns of the educated affluent on issues like climate change and gay marriage, while their economic policies focus on the public-sector workers, “green” industries and maintaining the social welfare net.

    Not surprisingly, this agenda does little for the middle-class — mostly suburban — voters.

    Sen. Scott Brown (R-Mass.), for example, won his margin of victory in largely middle- and working-class suburbs, where many voters had backed Obama in 2008, according to demographer Wendell Cox. Brown lost by almost 2-to-1 among poor voters — and also among those earning more than $85,000 a year.

    Given the danger revealed by these numbers, Democrats and other center-left parties around the world should refocus their policies on issues — such as taxes, private-sector job creation and small business — that affect such voters.

    For this growing class divide can be found globally: In China, for example, technological change and globalization have produced a new proletariat that, unlike in the past, is disinterested in warmed-over Maoist ideology.

    Perhaps nothing demonstrates this more clearly than the unrest at the Foxconn Technology Group. Workers produce cool products — for companies like Apple, Dell and Nintendo — but under such oppressive conditions that some have been driven to suicide.

    Mounting protests about Foxconn’s employment practices, and a recent rash of strikes in China’s Honda plants, reveal the disruptive potential of this class conflict.

    Even as China’s corporations and government become richer, inequality is widening. Indeed, over the past 20 years, China has shifted from an income-distribution pattern like that of Sweden or Germany to one closer to Argentina’s or Mexico’s. By 2006, China’s level of inequality was greater than that of the United States or India.

    Not surprisingly, class anger has reached alarming proportions. Almost 96 percent of respondents, according to one recent survey, agreed that they “resent the rich.”

    China’s class divides may be extreme, but similar patterns can be found almost everywhere. From India to Mexico, economic growth has led to a striking increase in the percentage of urbanites living in slum conditions.

    In 1971, for example, slum dwellers accounted for one in six Mumbaikars. Today, they are an absolute majority.

    This almost guarantees greater class conflict in the future, even as India’s economy booms.

    “The boom that is happening is giving more to the wealthy,” said R.N. Sharma of Mumbai’s Tata Institute of Social Sciences. “This is the ‘shining India’ people talk about. But the other part of it is very shocking — all the families where there is not even food security.We must ask: ‘The “shining India” is for whom?’”

    This growing inequality in the developing world is already shaping global politics. The failure of the Copenhagen climate change conference can be largely ascribed to the unwillingness of China, India, Brazil and other developing countries to sacrifice wealth creation opportunities for ecological reasons.

    Like their counterparts in New Delhi and Beijing, politicians in wealthier countries also face class conflict.

    In Britain, for example, even a massive expansion of the welfare state has done little to stop the U.K. from becoming the most unequal among the advanced European democracies.

    Alienation among white working-class voters — particularly those in the public sector or with modest small businesses — may have contributed to the Labour Party’s poor showing in the recent elections, according to Liam Byrne, the former Labour treasury secretary.

    A similar phenomenon appears in Australia. Labor Prime Minister Kevin Rudd, an icon among upper-class liberals, resigned in large part because of a precipitous decline in the polls among middle- and working-class suburban voters.

    What is not clear is whether conservative parties can abandon their often slavish devotion to big corporate interests to take advantage of these new dynamics. For years, these parties have relied on divisive social issues, like immigration, to win working- and middle-class voters. But it’s possible that a focus on profligate government spending might yet increase the right’s appeal among mid-income voters.

    As this current shift to greater inequality continues, the self-styled “popular” parties’ tendency to ignore class issues could prove disastrous.

    Unless they start addressing class issues in effective ways, they may lose not just their historical base but the political future.

    This article originally appeared in Politico.

    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 Febuary, 2010.

    Official White House Photo by Pete Souza

  • Singapore’s Demographic Winter

    Over the past half century arguably no place on earth has progressed more than the tiny island state of Singapore. A once impoverished, tropical powder keg packed into 268 square miles at the foot of the Malay Peninsula, the Mandarin-led republic has ascended from its difficult founding in 1965 to one of the richest economies on the planet. Today, in terms of purchasing power, its per capita income stands higher than most European countries’ or Japan’s and is roughly equal to that of the U.S.

    But a catastrophic plunge in the country’s birthrate–a problem plaguing many of the world’s affluent economies–could undermine Singapore’s success. In 1965 Singapore’s leaders feared it could not survive an unsustainable fertility rate above 3.5 and embarked on a campaign encouraging citizens to have smaller families. Today the country’s fertility rate–the number of children per female–has sunk to roughly 1.2 , a rate lower than all but a handful of countries and well below replacement level.

    This pattern poses a threat to the republic’s continued progress over the coming decades. The dependency ratio between retired persons and those 15 to 64–far lower than Europe, America or Japan in the 1970s–will reach the unsustainable levels of places like Japan, Germany and Italy by 2030. By then there could well be more people over 65 than under 15.

    This shift in demographics is a common challenge for almost all advanced countries–even the U.S., which enjoys the healthiest demography of any major wealthy nation. In Europe and particularly Asia, once challenged by overpopulation, there is the looming prospect of what a new documentary calls the “demographic winter.”

    Of course, not everyone finds this “winter” a chilling thought. A growing chorus of environmentalists, particularly in Europe and the U.S., sees the shrinking numbers of “little monsters” a boon for the planet.

    Peter Kareiva, the chief scientist at the Nature Conservancy, one of the more levelheaded environmental organizations, has concluded that not having children is the most effective way of reducing “carbon scenarios” and becoming an “eco hero.” Meanwhile the more extremist Voluntary Human Extinction Movement promotes the lovely notion of terminating the species through voluntary childlessness.

    For their part, Singapore’s leaders have focused on providing parkland, building a functioning subway and recycling city wastes. But these pragmatists show little tolerance for such Western-style species self-hatred. A society proud of its accomplishments, its agglomerated cultures–Chinese, Indian, Malay–continue to value family as the supreme societal unit.

    At the same time, many leaders trace the depth of their demographic problem to their own campaign to limit families back in the 1970s. “We have been very successful in reducing the birthrate,” observes Lui Pao Chuen, adviser to the National Research Foundation and a prime architect of Singapore’s defense systems. “The society will die if it goes on like this. We want our society to live on.”

    In the past decade Singapore’s leaders have tried to change course, attempting to raise the birth rate by offering generous cash incentives and other inducements for baby-making. But so far, they admit, these efforts have had little effect.

    Part of the problem may lie with high densities, an inescapable reality in a city-state with literally no suburban periphery. Singapore’s public housing–80% of citizens live in government flats–is generally better and larger than those in other Asian countries. Still the prospect of raising children in a 1,000-square-foot, two-bedroom flat may seem less appealing than doing so, say, in a suburban housing estate in Australia, New Zealand, California or Texas.

    Equally intractable may be the very competitive spirit at the heart of the republic’s success. Singapore possesses two great natural advantages: a strategic location between the Pacific and Indian Oceans and a motivated population. The city’s leaders have done a brilliant job of capitalizing on both, developing one of the world’s largest ports and one of Asia’s best-educated, hardest-working populations.

    This in turn has created a population that often places education and career advancement over child-raising, marriage and even dating. Some 85% of singles still express a desire to get married, and nearly 80% want two or three children. But the pressure to succeed often prevails. “The pace of life has people putting things on hold,” admits NG Mie Ling, coordinating director for the government’s Family Development Group.

    Despite these challenges, Singapore may not be doomed to follow Europe and other advanced east Asian nations into the demographic dustbin. For one thing, the city’s bureaucracy is cleverer than most and may be able to change some policies–placing more emphasis on leisure time for mate-chasing and child-raising to building larger apartments–to reverse the current birth dearth.

    Singapore’s unique ethnic and national identity may prove an even bigger asset. Unlike its Asian rivals, Singapore–though mainly Chinese–remains a truly multiracial society. Like America, it is a nation of immigrants. Few can trace their local roots there more than two or three generations. This makes the Republic more suited for accommodating newcomers from China, India and Malaysia, as well as from countries like the Philippines or Vietnam.

    Newcomers can find a kindred ethnic or religious community. Many also intermarry with Singaporeans; over 40% of all marriages are between citizens and noncitizens, up from only 30% a decade ago. Interracial marriages are also increasingly common. Whereas it is virtually impossible to become Japanese or Korean, one can become a Singaporean.

    Immigration allows Singapore’s population and skilled workforce to grow at a healthy clip despite the low birth rate. Today barely 3.2 million of the current nearly 5 million Singaporeans are citizens; many others immigrate to enjoy the excellent schools, the high degree of safety and cleanliness and a political stability that is rare in the region. Last year 60,000 people were granted permanent residency and nearly 20,000 became citizens.

    “We are still trying to figure out what it is to be a Singaporean,” observes Calvin Soh, chief creative officer in Asia for the Publicis advertising company. This evolving identity may not be obvious in the city’s impressive but hardly unique office, hotel and condo complexes. It is best illustrated in the city’s remarkable neighborhoods with their open air markets and a strikingly diverse food culture flourishing both in small, family-owned restaurants and hawker stalls.

    The city’s internationally recognized food scene, Soh believes, could serve as a model for other cultural products, from media and fashion to product design. Ideally suited to serve as the crossroads culture of 21st-century Asia , Singapore can emerge like 14th-century Venice, which flourished by connecting Europe with the civilizations further to the east.

    Like their counterparts in other successful countries, Singapore’s executives and administrators face enormous demographic challenges. But if any Asian society can confront, or at least ameliorate, the great fertility crisis, it is this tiny island country with a track record of solving seemingly insurmountable problems.

    This article 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. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in Febuary, 2010.

    Photo by FeebleOldMan