New Geography

Author: Joel Kotkin

  • Stimulus Plan Caters to the Privileged Public Sector

    Call it the Paulson Principle, Part Deux.

    Under the now thankfully-departed Treasury secretary, we got the first bailout for the undeserving – essentially, members of his own Wall Street class.

    Now comes the Democratic codicil to the P. Principle. It’s a massive bailout and expansion of the public-sector workforce as well as quasi-government workers in fields like health and education. Not so well-rewarded – except for expanded unemployment benefits – will be those suffering the brunt of the downturn, such as construction and manufacturing workers, whose unemployment is now heading north of 10%.

    Indeed, a close look at the current stimulus plan shows that as little as 5% of the money is going toward making the country more productive in the longer run – toward such things as new roads, bridges, improved rail and significant new electrical generation. These are things, like the New Deal’s many construction projects, that could provide a needed boost to our sagging national morale.

    Instead, we are focusing once again on those who have been getting the best deal for doing the least. The Bureau of Labor Statistics reports state and local government workers get paid 33% more than their private sector counterparts. If you add in the pensions and other benefits, the difference is over 40%. In New York alone, public-sector wages and benefits since 2000 have grown twice as fast as those of the average private-sector worker.

    Egregious stories of overpaid public workers are legion. In suburban Chicago, for example, some school administrators are making over $400,000 with benefits and incentives. Recent reports out of Boston suggest hundreds of firefighters and police officers make well in excess of $100,000 a year. And of course, there are the California prison guards who can make upwards of $300,000 a year with overtime.

    Of course, most public sector employees are not so lucky. But, for the most part, these workers enjoy protections, like health care for life, that most others could only dream about. Many also have pensions that allow them to retire in their 50s, while some of us will be hod-carrying well into our 70s.

    This all means that the potential price tag for swelling the public workforce could ultimately run into the trillions, a number Washington and Wall Street now use the way we used to talk about billions. At very least, we should be asking new public workers, or those whose jobs are being bailed out by the stimulus package, to make the kind of sacrifices demanded, say, of those working at General Motors. We could, for example, make them wait ’til age 60 or even 65 to retire.

    To no one’s surprise, much of this favoritism has to do with party politics. The basic truth is that auto and other industrial workers, like those in construction, have become somewhat expendable in the eyes of some Democrats – in part because they do not always follow the party line. In contrast, public-employee unions are the politically correct rock upon which much of the party now rests.

    This oversized influence is relatively recent. Yet as private-sector unions have waned, those in the public sector have waxed. They have been able to extort enormous benefits out of City Halls, counties, states and, of course, Congress.

    In the process, they have become – like the Wall Street financiers before them – a kind of privileged class. In the case of some Chicago garbage men, they often don’t work anything near 40 hours a week but are paid as if they did. Others engage in elaborate schemes to take advantage of injuries, real or imagined. Who would have thought that punching tickets for the Long Island Rail Road would be so hazardous that many retired employees use these “injuries” to collect disability money – in order to play golf or take another job?

    This can all get very expensive, especially given the poor immediate prospects that the stock market can finance these additional pensions. Some day the millennial generation should initiate a class action suit for placing this unconscionable burden on them.

    Right now, though, there’s little reason to expect President Obama and the majority Democrats will change direction. The public sector unions are often among the largest contributors to Democratic campaigns. They have also cultivated strong ties with the Washington media – some of whom, like The Washington Post’s Harold Meyerson, have argued over the years that these public workers are increasingly synonymous with the future middle class.

    There’s certain logic to this. Insulated from global competition, public employees have the ability to ratchet up their demands almost without serious limit. After all, even the most radical Republicans are not proposing to have the postal system transferred to Vietnam. We certainly don’t want to outsource our police services to China or Russia.

    So what’s not to like? Well, nothing – if the Roman Empire or China’s Qing Dynasty is your idea of a historical role model. Those regimes epitomize what happens when most of a nation’s wealth goes to support an ever-expanding bureaucracy and associated private-sector rent-seekers at the expense of both private commerce and public infrastructure. Look in the dictionary under the word decline.

    We can already see its early signs. Across the country, cities are being forced to choose between maintaining their basic infrastructure and honoring the medical, retirement and other pension obligations owed to retired public workers. The head of the Atlanta Fire Fighters’ Pension fund described groups like his as “the 800-pound gorilla in the room.” This primate has the power to stomp on the ability of states, cities and counties to put money into improving much of anything or even considering lowering taxes.

    Over time, though, one can hope President Obama will adjust his course. At some point, the middle- and working-class stiffs in the private sector – unionized or not – will question a stimulus that neglects their aspirations at the expense of protecting the imagined rights of yet another privileged class. Individually, public employees may not be as noxious as John Thain, but there are more of them. And over time, they could cost us even more.

    As a charismatic leader with strong union support, Obama could try to pull a “Nixon in China” and insist on reforming the benefits enjoyed by public workers as a condition of federal help. He wouldn’t be the only leader attempting a return to sanity. The idea of challenging public sector privilege has gained some currency in Ireland and France, as well as among the Liberal Democrats in the U.K.

    Such a bold initiative would earn President Obama not only gratitude from private sector workers but also posterity. But it would take courage, too; the mere suggestion of reform could result in a rash of strikes (as in Greece) and ceaseless yammering from union lobbyists and their allies on Capitol Hill.

    Of course, public-sector unions and their supporters will argue that they constitute an important part of the nation’s middle class and that their benefits are therefore sacrosanct. Yet it’s increasingly evident that this strata of middle-class workers live in a different reality than typical private sector shmoes. As George Orwell suggested in Animal Farm, it seems some animals are more equal than others.

    This article originally appeared at Forbes.

    Joel Kotkin is executive editor of NewGeography.com and is a presidential fellow in urban futures at Chapman University. He is author of The City: A Global History and is finishing a book on the American future.

  • Obama: Only Implement Green Policies that Make Sense in a Time of Crisis

    With the exception of African-Americans, the group perhaps most energized by the Barack Obama presidency has been the environmentalists. Yet if most Americans can celebrate along with their black fellow citizens the tremendous achievement of Obama’s accession, the rise of green power may have consequences less widely appreciated.

    The new power of the green lobby — including a growing number of investment and venture capital firms — introduces something new to national politics, although already familiar in places such as California and Oregon. Even if you welcome the departure of the Bush team, with its slavish fealty to Big Oil and the Saudis, the new power waged by environmental ideologues could impede the president’s primary goal of restarting our battered economy.

    This danger grows out of the environmental agenda widening beyond such things as conservation and preserving public health into a far more obtrusive program that could affect every aspect of economic life. As Teddy Roosevelt, our first great environmentalist president, once remarked, “Every reform movement has a lunatic fringe.”

    Today, the “green” fringe sometimes seems to have become the mainstream, as well. While conservationists such as Roosevelt battled to preserve wilderness and clean up the environment, they also cared deeply about boosting productivity as well as living standards for the middle and working classes.

    In contrast, the modern environmental movement often seems to take on a different cast, adopting a largely misanthropic view of humans as a “cancer” that needs to be contained. Our “addiction” to economic growth, noted Friends of the Earth founder David Brower, “will destroy us.” Other activists regard population growth as an unalloyed evil, gobbling up resources and increasing planet-heating greenhouse gases.

    For such people, the crusade against global warming trumps such things as saving the nation’s industrial heartland, which is largely fueled by coal, oil and natural gas, even if it means the inevitable transfer of additional goods making it to far dirtier places such as India and China. Of course, the current concern over global warming could still prove to be as exaggerated as vintage 1970s predictions of impending global starvation or imminent resource depletion.

    Certainly experience suggests we should not be afraid to question policies advocated by the true believers — particularly amid what threatens to be the worst economic downturn in generations. Actions taken now in the name of climate change could have powerful long-term economic implications.

    We don’t have to imagine this in the abstract; just look at the economies of two of the greenest states — Oregon and California — whose land use, energy and other environmental policies have helped contribute to higher housing and business costs as well as an exodus of entrepreneurs.

    Bill Watkins, head of the forecasting project at the University of California, Santa Barbara, notes that these two environmentally oriented states now have among the nation’s highest unemployment rates, pushing toward 10 percent — ahead of only the Rust Belt disaster areas farther east. In some places, such as central Oregon, it could hit close to 15 percent next year.

    Many green activists, along with “smart growth” advocates and new urbanists, laud Oregon’s long-standing strict land use controls as a national role model. Recently imposed land use legislation in California, concocted largely to meet the state’s restrictions on greenhouse gas, has been greeted by them with almost universal hosannas.

    Of course, there is nothing wrong at all with trying to curb excessive sprawl or energy use. Promoting a dense urban lifestyle is also commendable, but it is an option that appeals to no more than 10 percent to 20 percent of the population. This is even truer of middle-class people with children, few of whom can hope to live the urban lifestyles of the Kennedys, Gores and other elites — much less also afford one or two country homes to boot.

    Tough land use policies are not only hard on middle-class aspirations, but they appear to have played a role in inflating the extreme bubble that affected the California and Oregon real estate markets. Limiting options for where people and business can locate, notes UCSB’s Watkins, tends to drive up the prices of desirable real estate beyond what it would otherwise cost.

    Perhaps worst of all, it is not at all certain that a forced march back to the cities would necessarily produce a better, more energy-efficient country. Sprawling and multipolar, with jobs scattered largely on the periphery, most American cities do not lend themselves easily to traditional mass transit; in many cases, this proves no more energy efficient than driving a low-mileage car, using flexible jitney services or, especially, working at home. Big cities also have a potential for generating a “heat island” effect that can result in higher temperatures.

    Energy policy represents another field where hewing too close to the green party line could prove problematic. Obama already has endorsed California’s approach as exemplary. And indeed, some things — like imposing tougher mileage standards, stronger conservation measures and more research into cleaner forms of energy — could indeed bring about both short-term and long-term economic benefits.

    However, there are also downsides to adopting a California-style single-minded focus on renewable fuels such as solar and wind. Right now, these sources account for far less than 1 percent of our nation’s energy production. Even if doubled or tripled in the next few years, they seem unlikely to reduce our future dependence on foreign oil or boost our overall energy supplies in the short, or even medium, term.

    Looking at the experience of these two states, bold claims about vast numbers of green jobs created by legislative fiat seem more about offloading costs to consumers, business and taxpayers than anything else, particularly at today’s current low energy prices. In contrast, new environmentally friendly investments in natural gas, hydro, biomass and nuclear are more likely to find private financing and may work sooner both to reduce dependence on foreign fuels and to keep energy prices down.

    The Obama administration certainly should listen to the arguments of environmentalists. But given the clear priority among voters to deal first with the economy, the president should implement only those green policies that make sense at this time of crisis. A sharp break from the Bush approach is certainly welcome, but not in ways that promise more pain to ordinary Americans and our faltering economy.

    This article originally appeared at Politico.

    Joel Kotkin is executive editor of NewGeography.com and is a presidential fellow in urban futures at Chapman University. He is author of The City: A Global History and is finishing a book on the American future.

  • New York Should End Its Obsession With Manhattan

    Over the past two years, I have had many opportunities to visit my ancestral home, New York, as part of a study out later this week by the Center for an Urban Future about the city’s middle class. Often enough, when my co-author, Jonathan Bowles, and I asked about this dwindling species, the first response was “What middle class?”

    Well, here is the good news. Despite Mayor Bloomberg’s celebration of “the luxury city,” there’s still a middle class in New York, although not in the zip codes close to hizzoner’s townhouse. These middle-class enclaves are as diverse as the city. Some are heavily ethnic, others packed with arty types, many of them more like suburbia than traditionally urban.

    This New York is vastly different from the one that appears in most movies. It is more like the New Jersey portrayed in “The Sopranos” or “All in the Family” (set in Queens) than Manhattan-centric “Seinfeld” and “Sex and the City”. Largely, this middle class stays in New York – despite the congestion, high taxes and regulatory lunacy – because that is where they are from, where they worship and where they are close to their places of work.

    In many cases, they live in Bay Ridge, Bayside, Brighton or Bensonhurst, in the vast sprawl that is Brooklyn and Queens. New York’s middle class is also highly diverse. In many areas, the descendants of Italians or Poles live cheek by jowl with newer groups such as Koreans, Chinese, Indians, Jamaicans, Russians, Israelis and Pakistanis. They stay and raise their children, in large part because of their extended family networks. As Queens resident and real estate agent Judy Markowitz puts it, “In Manhattan people with kids have nannies. In Queens, we have grandparents.”

    Some of the emerging middle class also cluster in places like Ditmas Park, a reviving part of Flatbush. The new population here is made up largely of information age “artisans” – musicians, writers, designers and business consultants who cluster in New York. They may have migrated there for the culture, but they stay because they find these neighborhoods congenial and family-friendly.

    “It’s easy to name the things that attracted us – the neighbors, the moderate density,” explains Nelson Ryland, a film editor with two children who works part-time at his sprawling turn-of-the-century Flatbush house. “More than anything, it’s the sense of the community. That’s the great thing that keeps people like us here.”

    For these reasons, New York’s middle class may be hard to displace, but they certainly are under considerable stress. Urban life may have improved from its nadir in the 1970s, but our findings show that net out-migration from the city, particularly as people get into their late 20s and early 30s, has continued.

    The now-imploding economic boom did not halt this pattern. Indeed out-migration in the last few years has been greater on a per capita basis than that of the early 1990s, when “escape from New York” was a recurring media theme. The reasons: the nation’s highest cost of living, poor public schools, inadequate transit, expensive housing, high taxes and lack of broad-based economic opportunity.

    Much the same process is occurring in other great cities from San Francisco and Los Angeles to Chicago and Philadelphia. Indeed, even as gentrification brings in wealthy childless couples and students (often supported by their suburban parents) to urban areas, the number of middle-class neighborhoods has continued to decline, as demonstrated by a 2006 Brookings Institution paper.

    This is true, for example, in the San Fernando Valley section of Los Angeles, where I live. Once overwhelmingly made up of home-owning, moderate-income earners, the Valley is becoming increasingly bifurcated between the affluent and a growing class of largely minority renters.

    The hollowing of the New York middle class has been even more rapid. In 2006, Manhattan, the cradle of gentry liberalism, had achieved the widest gap between rich and poor in the nation. Overall, New York has the smallest share of middle-income families in the nation: The city’s middle class – those making between $35,000 and $150,000 a year – fell to 53% between 2000 and 2005, while remaining steady nationwide at 63%.

    Up until now, these trends did not much bother New York’s media, business and political hegemons. Under its ruling Medici, Mayor Michael Bloomberg, New York has been shaped as a place for the masters and their servants. Such Bloombergian priorities as the Second Avenue subway, the taxpayer-subsidized construction of luxury-box-laden stadiums, as well as an orgy of a city-inspired luxury condominium construction and plans for ever more high-end office towers reflect this worldview.

    Of course Bloomberg’s “luxury city” is largely a Manhattanite vision, with a few tentacles spreading to the adjacent parts of the outer boroughs. It takes its sustenance from the enormous wealth generated by Wall Street as well as the presence of a large “trustifarian” class. This is very much the New York of The New York Times: fashionably liberal in politics, self-consciously avant-garde, and devoted, more recently, to “green” consumerism.

    At the height of the boom – say two years ago – some imagined there were enough folks such as these to sustain the city. They would now constitute a de facto new middle class, except their bank accounts would have extra zeros. When Jonathan and I interviewed a developer, he bristled at us for suggesting that New York’s middle class was shrinking. “Of course, there’s a middle class,” he stated flatly. “Why, my friend’s son just bought a place here in Manhattan.”

    “Oh really?” I asked, a bit incredulously. “And how much was the apartment?”

    “One and half million.”

    “And how did he pay for it?”

    “His dad.”

    Now, with Wall Street’s money machine in reverse and the Manhattan real estate market unraveling, the surplus capital to finance million-dollar condominiums for kids may well have evaporated. Similarly, the parade of top graduates from business and law schools could slow, now that the big bonus regime may be coming to an end. If you are going to be paid bankers’ wages, why not live somewhere cheaper?

    Yet despite the tough times, there is no real reason for New Yorkers to fear a return to the bad old days of the 1970s, as Reuters recently warned. New York used to have a diverse, middle-class economy that was remarkably recession-proof.

    It could have such an economy in the future as well. A modern version may be less reliant on manufacturing, but focused instead on the talents of its citizens in such things as design, marketing and data analysis. Still, it would be a small business-oriented economy – one that could flourish outside Manhattan.

    New York should cultivate such an economic shift and also turn its attention from the chic precincts to its middle-class neighborhoods. In the post-Wall Street era, the “luxury city” concept needs to be discarded just like other toxic manifestations from a discredited era.

    This article originally appeared at Forbes.

    Joel Kotkin is executive editor of NewGeography.com and is a presidential fellow in urban futures at Chapman University. He is author of The City: A Global History and is finishing a book on the American future.

  • Obama, Fight The Green Agenda

    In his remarkable rise to power, President Barack Obama has overcome some of the country’s most formidable politicians – from the Bushes and the Clintons to John McCain. But he may have more trouble coping with a colleague he professes to admire: former Vice President Al Gore.

    To date, motivations from sweet reason to hard-headed accommodation have defined Obama’s Cabinet choices, most notably in such areas as defense and finance. Oddly enough, though, his choices on the environmental front are almost entirely Gore-ite in nature. Obama’s green team, for example, includes longtime Gore acolyte Carol Browner as climate and energy czar, physicist Steven Chu as energy secretary and, perhaps most alarmingly, John Holdren as science adviser.

    These individuals are not old-style conservationists focused on cleaning up the air and water or protecting and expanding natural areas. They represent a more authoritarian and apocalyptic strain of true believers who see in environmental issues – mainly, global warming – a license to push a radical agenda irrespective of its effects on our economy, our society or even our dependence on foreign energy.

    We should not underestimate the power of these extreme greens. They can count on the media to cover climate and other green issues with all the impartiality of the Soviet-era Pravda. Stories that buttress the notion of man-made global warming – like reports of long-term warming in Antarctica – receive lavish attention in The New York Times and on Yahoo!.

    Meanwhile, other reports, such as new NASA studies indicating cooling sea temperatures since 2003, or the implications of two unusually cool winters, are relegated to the mostly conservative blogosphere.

    I am no scientist. For all I know, both sides are lying or exaggerating. However, we do need to take history into account. Scientists have not been and are not immune to hysteria or groupthink, particularly when taking the “correct” view means a lush supply of cash from foundations and governmental labs. Nor is “consensus,” however constructed, always right.

    In fact, lockstep “official” science is often very wrong – from the pre-Copernican view of the solar system, to the decades spent ridiculing the now undisputed reality that continents drift over time, to eugenics or even, back in the 1970s, concern over “global cooling.”

    The past also suggests we should be particularly leery of purveyors of impending natural apocalypse. Holdren, the new science czar, for example, is a longtime disciple of the largely discredited neo-Malthusian Paul Ehrlich, who in the early ’80s bluntly predicted that global mass starvation was imminent and that critical metals would suffer severe shortages. Neither calamity has occurred – even as both global population and economic activity have surged dramatically.

    Obama may also want to consider the consequences of following the catastrophists. Supporting green causes might have been useful for bludgeoning George Bush and for raising cash over the Internet from affluent urban professionals. But now these environmentalists could obstruct his program for creating broad economic recovery and meeting the nation’s energy challenges – and they could even slow his party’s quest to secure a permanent electoral majority.

    For one thing, the economic crisis has shifted the public’s attention away from environmental issues. Recessions may reduce greenhouse gases and halt development, but they terrify voters and shift their priorities. A recent Pew survey of 20 top priorities for 2009 shows the public places a growing emphasis on strengthening the economy and particularly creating jobs, each cited by over 80% of respondents.

    In contrast, concern over the environment has dropped to 41% – down from 57% in 2007. Global warming ranked dead last; 30% of respondents named it a priority, a figure down from 38% just two years ago.

    Green activists might force the administration to eschew some of the tools that could best restore the economy. For example, they often oppose expenditures that drive industrial and agricultural growth – investments in ports, roads, bridges and even freight rail – which some see as greenhouse gas boosters. With the likes of Browner, Chu and Holdren in charge – no matter what Congress’s intentions are – an emboldened regulatory apparatus could use their power to slow, and even stop, many infrastructure improvements.

    At the same time, greens can be expected to line up with the information-age lobby, whose notion of stimulus focuses largely on universities, health care, arts, culture and media. This “post-industrial strategy,” notes author Michael Lind, may be fine for Manhattan and San Francisco, but it’s not so appealing in Michigan, Ohio, Appalachia or the Great Plains.

    All this green-blessed employment would likely produce precious few well-paying, long-term, private-sector jobs for middle- or working-class Americans. Obama should understand, as much as anyone, that the votes that won him the presidency came largely from suburban voters who are concerned about their economic futures.

    Of course, suburbanites care about the environment too, but they would rather see practical steps to clean up air and water quality and expand public open space. In contrast, the greenocrats are generally hostile to cars and single-family homes – the suburbs themselves. In other words, they largely detest many of the very things middle-class voters cherish.

    Perhaps nowhere will this green agenda create more potential problems than in the energy arena. I have long held that conservation should be encouraged in every reasonable way possible. However, it is clearly fanciful to believe that solar, wind and other renewables can supply the bulk of the new power we need now to, as President Obama put it, “fuel our cars and run our factories” – much less meet the needs of the 100 million or more American who will be online by 2050.

    Just look at the numbers. According to the latest (2007) figures from the Energy Information Agency, renewable energy accounts for less than 7% of U.S. consumption – and almost all of that is derived from burning wood and waste and hydroelectric power. Nuclear generation accounts for over 8%, while fossil fuels meet nearly 85% of America’s energy needs. On the other hand, wind and solar power, which the new president has promised to “harness,” account for just 0.39% of total American energy.

    Even doubling renewables in the next few years – itself an expensive and difficult goal – would do relatively little to meet the nation’s demand for energy. In this light, the incoming energy secretary’s strong antipathy to fossil fuels – particularly coal, which he once described as his “worst nightmare” – coupled with his lack of enthusiasm for nuclear power, which is collectively the source of over 93% of U.S. energy, seems a bit problematic.

    We can only solve America’s energy needs by blending a variety of alternative solutions – renewables, conservation, nuclear – with fossil fuel-based energy. This approach, which would vary by region, would also help revive manufacturing, agriculture and other productive industries. A renewables-only approach, in contrast, would impose very high prices and require massive subsidization, leading to greater dependence on overseas energy and also, perhaps, to a permanently shrunken economy.

    These challenges, along with recent shifts in the public’s priorities, suggest that the president may need to distance himself from his extreme green advisers – or, somehow, get them to toe a more sensible line.

    In his new job, President Obama must confront many dangerous ideologues from organizations like Hamas and al-Qaida. His political future, however, may ultimately hinge on how he handles the dogmatic ideologues he has now lifted to the highest levels of our government.

    This article originally appeared at Forbes.

    Joel Kotkin is executive editor of NewGeography.com and is a presidential fellow in urban futures at Chapman University. He is author of The City: A Global History and is finishing a book on the American future.

  • Height of Power: The Washington Fiefdom Looms Larger Than Ever

    For more than two centuries, it has been a wannabe among the great world capitals. But now, Washington is finally ready for its close-up.

    No longer a jumped-up Canberra or, worse, Sacramento, it seems about to emerge as Pyongyang on the Potomac, the undisputed center of national power and influence. As a new president takes over the White House, the United States’ capacity for centralization has arguably never been greater. But it’s neither Barack Obama’s charm nor his intentions that are driving the centrifocal process that’s concentrating authority in the capital city. It’s the unprecedented collapse of rival centers of power.

    This is most obvious in economic affairs, an area in which the nation’s great regions have previously enjoyed significant autonomy. But already the dukes of Wall Street and Detroit have submitted their papers to Washington for vassalage. Soon many other industries, from high-tech to agriculture and energy, will become subject to a Kremlin full of special czars. Even the most haughty boyar may have to genuflect to official orthodoxy on everything from social equity to sanctioned science.

    At the same time, the notion of decentralized political power – the linchpin of federalism – is unraveling. Today, once proudly independent – even defiant – states, counties and cities sit on the verge of insolvency. New York and California, two megastates, face record deficits. From California to the Carolinas, local potentates with no power to print their own money will be forced to kiss Washington’s ring.

    Americans may still possess what the 19th-century historian Frederick Jackson Turner described as “an antipathy to control,” but lately, they seem willing to submit themselves to an unprecedented dose of it. A financial collapse driven by unrestrained private excess – falling, ironically, on the supposedly anti-Washington Republicans’ watch – seems to have transformed federal government cooking into the new comfort food.

    To foreigners, this concentration of power might seem the quintessence of normalcy. As the sociologist E. Digby Baltzell wrote in 1964, elites have dominated and shaped the world’s great cosmopolitan centers – from Athens to Rome to Baghdad – throughout history. In modern times, capital cities such as London, Paris, Moscow, Berlin and Tokyo have not only ruled their countries but have also largely defined them. In all these countries (with the exception of Germany, which was divided during the Cold War), publishing, media, the arts and corporate and political power are all concentrated in the same place. Paris is the undisputed global face of France just as London is of Great Britain or Tokyo is of Japan.

    Although each had their merchant classes, these cities were strongly hierarchical, governed by those closest by blood or affiliation to the ruling family and populated largely by their servants. In contrast, Baltzell observed, U.S. cities such as New York have been “heterogeneous from top to bottom.” Their power came not from the government or the church but from trade, the production of goods and scientific innovations, as well as the peddling of ideas and culture.

    But Washington has always occupied a unique and somewhat incongruous niche among U.S. cities. It came into being not because of the economic logic of its location, but because it was a convenient compromise between North and South. It never developed into a center of commerce or manufacturing. Nor was it meant to be a fortress. Instead, it was designed for one specific purpose: to house the business of governance.

    Pierre Charles L’Enfant, the French-born classicist and civil engineer who developed the plan for the city, envisioned a majestic capital that would “leave to posterity a grand idea of the patriotic interest,” as he wrote in 1791. Yet for most of its history, Washington failed to measure up to the standards of European or Asian capitals. In January 1815, a South Carolina congressman described the capital to his wife as a “city which so many are willing to come to and all so anxious to leave.”

    This lowly status stemmed, to some extent, from what the historian James Sterling Young has defined as the “anti-power” ethos of early Americans. The revolutionary generation and its successors loathed the confluence of power and wealth that defined 19th-century London or Paris. A muddy outpost in the woods seemed more appropriate to republican ideals.

    Even as other American cities, such as New York and Baltimore, expanded rapidly, Washington grew slowly, at a rate well below the national average. Bold predictions that the city would boast a population of 160,000 by the 1830s fell far short. Instead, it had barely reached 45,000 people, including more than 6,000 slaves. It remained eerily bereft of all the things that make cities vital – thriving commerce, a busy port, decent eateries and distinguished shops. Visiting the city in 1842, Charles Dickens marveled at a city of “spacious avenues that begin in nothing and lead nowhere.”

    To some observers, such as Alexis de Tocqueville, Washington’s relative decrepitude reflected one of the glories of the young republic. The fact that the country had “no metropolis” that dominated it from the center struck the young noble, on his visit to America in the early 1830s, as “one of the first causes of the maintenance of Republican institutions.”

    Washington’s status improved only marginally in the next century, even as other brilliant centers of power, culture and commerce emerged on the Eastern Seaboard and then across the Midwest and West. The rapid rise of New York was challenged in quick succession by the even more sudden emergence of Chicago in the industrial Midwest and San Francisco on the Gold Rush coast of California. Washington was surely the nerve center of politics, but commerce, culture and the vast majority of the media chose to concentrate elsewhere.

    It would take enormous misfortune – the Depression – to provide Washington with its first great growth spurt. As the business empires of New York, Chicago, Detroit and Cleveland buckled and the New Deal took control of the economy, power shifted decisively to the capital. This expansion of influence continued with the onset of World War II and then during the Cold War.

    The ensuing rise of the military and domestic bureaucracies transformed Washington from a small provincial city into a major metropolitan area. The greater economic shift from a predominantly manufacturing to a high-tech, information-centered economy also played to Washington’s strengths. In his groundbreaking 1973 book The Coming of Post-Industrial Society, the sociologist Daniel Bell predicted that the country’s prevailing “business civilization” would inevitably become dominated by the government bureaucracy. Corporations would eventually look to Washington’s lead for regulatory standards, to sponsor research and make critical science-related decisions.

    In the past half-century, this confluence of technology and bureaucracy has transformed Washington and its surrounding suburbs into the most dynamic large metropolitan economy in the Northeast. Between 1950 and 1996, the region’s population expanded by roughly 150 percent, three or more times faster than other cities along the Boston-Washington corridor.

    By the mid-1970s, Washington and its environs had also emerged as the richest region in the country. Since then, it has remained at or near the top of metropolitan areas in terms of both per capita income and level of education. Despite deplorable concentrations of poverty, particularly in the city proper, the region’s average household incomes remain the highest in the country – nearly 50 percent above the national average. The percentage of adults with a bachelor’s degree or higher, nearly 42 percent, surpasses even such brainy-seeming places as greater Boston, Seattle and Minneapolis.

    The contrast between Washington and most of the United States has gradually become more pronounced. In good times and in bad, lawyers, lobbyists and other government retainers have continued to enrich themselves even as the Midwest industrial-belt cities have cratered and most others struggled to survive. “The vision of generations of liberals,” admitted the New Republic in the mid-1970s, “has created a prosperous and preposterous city whose population is completely isolated from the people they represent and immune from the problems they are supposed to solve.”

    In today’s crisis, the Washington area remains somewhat aloof, with the second-lowest unemployment rate among major metropolitan areas of more than 1 million. (Only Oklahoma City, largely insulated from both the financial and housing bubbles, is doing better, although collapsing energy prices could threaten its prosperity.) The rate of job growth, although slower, is still among the highest in the country, and unemployment is below the national average.

    This disparity will grow in the coming years, as rival regions reel from the recession. Many once-powerful places are already losing their independence and allure. Wall Street, formerly the seat of privatized power, has been reduced to supplicant status. The fate of New York Mayor Michael Bloomberg’s “luxury city” will be determined not in deals with London, Dubai or Shanghai but by the U.S. Treasury. Similarly, the vast auto economy of the upper Midwest will take direction from congressional appropriations and whoever is named the new “car czar.”

    This loss of power in the provinces will broaden in scope during the coming months. Even proud Texas has lost its unique political influence. Its energy barons will now be forced to do the bidding of the lawmakers and regulators, instead of carrying them in their hip pockets.

    Even industries that are well plugged in to the new Obama regime – such as venture capital and alternative energy – are facing financial ruin from the downturn in both markets and energy prices. To win new funding and subsidies for their next bubble, they’ll increasingly rely not on their ballyhooed cleverness but on their pull with the White House, Congress and the new science apparat, under the green-oriented Energy Secretary Steven Chu and Obama’s neo-Malthusian pick for White House science adviser, physicist John Holdren.

    All this is bad news for much of America, but it should mean great business for many residents of greater Washington. Sudden interest in District pied-a-terres among investment bankers, venture capitalists, energy potentates and their hired help could do a lot to restore the battered condominium market. Office buildings in the District and surrounding environs can now expect a new rush of tenants, both from the private sector and the soon-to-be expanding federal bureaucracies.

    The transfer of cultural power to Washington will also accelerate. After all, Washington is more than ever where the action is. Media outlets have already been shifting out of New York and other cities – the Atlantic Monthly moved from Boston to Washington in recent years, and USA Today, National Public Radio and XM Radio are headquartered in or near the capital. A city that, according to one 19th-century account, had a cuisine consisting largely of “hog and hominy grits” now boasts world-class restaurants, draws top-line chefs to its food scene and will continue to develop into a serious epicurean center. The area already ranks third in film and television production, largely because of a thriving news and documentary business, as embodied in National Geographic, the Public Broadcasting Service and the Discovery Channel.

    Over time, those of us in the provinces may grow to resent all this, seeing in Washington’s ascendancy something obtrusive, oppressive and contrary to the national ethos. But don’t expect Washingtonians to care much. They’ll be too busy running the country, when not chortling all the way to the bank.

    This article originally appeared at the Washington Post.

    Joel Kotkin is executive editor of NewGeography.com and is a presidential fellow in urban futures at Chapman University. He is author of The City: A Global History and is finishing a book on the American future.

  • Obama Family Values

    For a generation, conservatives have held a lock on the so-called “values” issue. But Barack Obama is slowly picking that lock, breaking into one of the GOP’s last remaining electoral treasures.

    The change starts with the powerful imagery of the new First Family. The Obamas seem to have it all: charming children; the supremely competent yet also consistently supportive wife, and the dynamo grandma, Marian Robinson, who serves as matriarch, moral arbiter and babysitter in chief.

    The new president’s focus on family reflects an increasing emphasis among African-American leaders on the importance of parental values. Many prominent black activists initially scorned Sen. Daniel Patrick Moynihan’s 1965 report linking poverty among African-Americans to the decline of intact family units. But today, when roughly half of all black children live with single mothers, it is widely accepted that strong families represent the most effective way to reduce “the racial gap” in incomes.

    When it came to family, the last Democratic White House residents – the highly entertaining but also obviously dysfunctional Clintons – embodied persistent conflicts among baby boomers over sex and social roles. Remember Hillary’s resentful comments about “baking cookies”?

    By contrast, the focused and disciplined Obamas epitomize the aspirations most Americans hold for their own personal lives: caring fathers, strong mothers and an involved extended family.

    These ideals may be particularly appealing for Americans under 40, whose support has been instrumental in the president’s rise to power. Younger Americans are proving to be more family-oriented, in part because close to half come from divorced homes.

    Surveys reveal that people born between 1968 and 1979 place a considerably higher value on family, and a lower value on work, than their baby-boomer counterparts. Women in the former age cohort are actually having more children than their predecessors and, particularly among the college-educated, they appear to be working somewhat less.

    And this family-friendly shift is likely to continue throughout the next wave of child-rearers. As Morley Winograd and Michael Hais suggest in their book, Millennial Makeover, the Millennial generation, born after 1983 and twice as numerous as Generation X, also enthusiastically embraces the notion of a strong family.

    Indeed, three-fourths of 13- to 24-year-olds, according to one 2007 survey, consider time spent with family the most important factor in their own happiness, rating it even higher than time spent with friends or a significant other. More than 80% thought getting married would make them happy. Some 77% said they definitely or probably would want children, while less than 12% said they likely wouldn’t.

    What’s more, the current state of the economy is likely to strengthen ties among family members. One-fourth of Generation X-ers, for example, still receive financial help from their parents, as do nearly one-third of Millennials. As many as 40% of Americans between ages 20 and 34 now live at least part-time with their parents, an option that will only become more commonplace in areas where home prices are particularly high and employment opportunities are sharply limited.

    Yet even if family values are in ascendance, how they are expressed sharply diverges from the norms and attitudes typically associated with the Religious Right. In fact, on a host of issues – including gay rights, interracial dating and stem cell research – millennials trend more toward liberal views than earlier generations, Winograd says.

    “They are more tolerant as well as more conventional,” he notes. “They follow the social rules – they don’t want to be rebellious. They want a basically conventional suburban family life.”

    Attitudes concerning religion – the other critical part of the “values” issue – reveal a similar fusion of conventionality and pragmatism. Like other Americans, Millennials are far more religiously oriented than their counterparts in other advanced countries. Fully one-fourth of Americans in their 20s and 30s, observes Princeton sociologist Robert Wurthnow, consider themselves “very spiritual,” even if they rarely attend church. A 2003 UCLA study found roughly three out of four college students deem their spiritual or religious views important, but most see their (older) professors as largely indifferent to such concerns.

    Yet this spiritual orientation does not imply a shift toward any retrograde “moral majority” conservatism. Upward mobility among evangelicals and fundamentalists, as well as the increased racial integration within churches, has lessened the once-glaring gaps between conservative Protestants, particularly in the South, and the rest of American society. This liberalization is particularly acute when it comes to issues like homosexuality and censorship, but also extends to the role of women and the teaching of religion in public schools.

    I’ve observed this shift firsthand teaching at Pepperdine, a school associated with the conservative Church of Christ, and Chapman University, which has a more liberal Christian orientation. Students embracing fundamentalist or evangelical creeds usually oppose both abortion and gay marriage, but they appear remarkably tolerant and accepting of homosexuals, racial minorities and Jews – attitudes that might shock the more insulated liberal landsmen.

    My more religious students also tend to be ecumenical in their views. Like the Obamas, many are seeking the right mix of spirituality and social activism. Wade Clark Roof, the author of Spiritual Marketplace: Baby Boomers and the Remaking of American Religion, describes such people as ‘grazers.’ They often meet their spiritual needs through different channels – online Bible study, meditation and even Buddhism.

    Obama seems to be honing his appeal to precisely this demographic. Tapping Orange County evangelical minister Rick Warren for the inaugural invocation opens an important avenue to a new generation of spiritually oriented young people.

    Warren should concern the increasingly marginal hard-right Christian conservatives, who face potent competition for the political loyalties of their younger congregants. With economic issues pushing the middle class to the left, Democratic progress among the so-called “value” voters could leave the already bedraggled Republican ranks even more seriously diminished.

    Also threatened are those on the cultural left, some of whom expressed outrage about Warren’s appointment. Some Democrats see it as part of a conscious strategy to subordinate their social agenda for a more mainstream, family-centered one that holds broader political appeal. “It’s good for him to let the bed-wetters go,” scoffs one well-connected Southern California labor organizer. “They are the ones who have made it difficult to get a majority for the really important things.”

    In reality, though, Obama’s jettisoning of the cultural left is relatively risk-free. No matter how offended they might be, feminist, gay-rights and ultra-secularist activists are not likely to become Republicans. Even if Obama is not as perfect as they imagined, he will be far more amenable to their causes than George W. Bush.

    Overall, Obama is playing an exceedingly smart game of cultural politics. Most Americans, particularly youth, no longer relate to the vintage 1950s sitcom Ozzie and Harriet, an illustration of the lifestyle embraced by conservatives. Too many women now work outside the home and have friends or relatives who practice “alternative lifestyles.” Demonizing “deviants” is increasingly difficult, after all, when many if not most Americans have loved ones who are gay or otherwise outside the historical mainstream.

    Yet at the same time, there is a growing rejection of the highly secularized, self-absorbed lifestyle many boomers embrace. As a result, when it comes to today’s values, the role models seem to be socially hip and strong families like the Huxtables from The Cosby Show. Or perhaps, just maybe, the Obamas.

    This article originally appeared at Forbes.

    Joel Kotkin is executive editor of NewGeography.com and is a presidential fellow in urban futures at Chapman University. He is author of The City: A Global History and is finishing a book on the American future.

    Image courtesy flickr user Vargas2040

  • Does Growing Inequality Mean the End of Upward Mobility?

    Barack Obama’s ascension to the presidency won’t end racism, but it does mean race is no longer the dominant issue in American politics. Instead, over the coming decades, class will likely constitute the major dividing line in our society—and the greatest threat to America’s historic aspirations. This is a fundamental shift from the last century. Writing in the early 1900s, W.E.B. DuBois observed, “The problem of the 20th century is the problem of the color line.” Developments in the ensuing years bore out this assertion. Indeed, before the 1960s, the decade of Barack Obama’s birth, even the most talented people of color faced often insurmountable barriers to reaching their full potential. Today in a multiracial America, the path to success has opened up to an extent unimaginable in DuBois’s time.

    Obama’s ascent reflects in particular the rise of the black bourgeoisie from tokens to a force at the heart of the meritocracy. Since the late 1960s, the proportion of African-American households living in poverty has shrunk from 70 percent to 46 percent, while the black middle class has grown from 27 percent to 37 percent. Perhaps more remarkable, the percentage who are considered prosperous—earning more than $107,000 a year in 2007 dollars—expanded from 3 percent to 17 percent.

    Yet as racial equity has improved, class disparities between rich and poor, between the ultra-affluent and the middle class, have widened. This gap transcends race. African-Americans and Latinos may tend, on average, to be poorer than whites or Asians, but stagnant or even diminishing incomes affect all ethnic groups. (Most housecleaners are white, for instance—and the same goes for other low-wage professions.) Divisions may not be as visible as during the Gilded Age.

    As Irving Kristol once noted, “Who doesn’t wear blue jeans these days?” You can walk into a film studio or software firm and have trouble distinguishing upper management from midlevel employees.

    But from the 1940s to the 1970s, the American middle class enjoyed steadily increasing incomes that stayed on a par with those in the upper classes. Since then, wages for most workers have lagged behind. As a result, the relatively small number of Americans with incomes seven times or more above the poverty level have achieved almost all the recent gains in wealth. Most disturbingly, the rate of upward mobility has stagnated overall, which means it is no easier for the poor to move up today than it was in the 1970s.

    This disparity is strikingly evident in income data compiled by Citigroup, which shows that the top 1 percent of U.S. households now account for as much of the nation’s total wealth—7 percent—as they did in 1913, when monopolistic business practices were the order of the day. Their net worth is now greater than that of the bottom 90 percent of the nation’s households combined. The top 20 percent of taxpayers realized nearly three quarters of all income gains from 1979 to 2000.

    Even getting a college degree no longer guarantees upward mobility. The implicit American contract has always been that with education and hard work, anyone can get ahead. But since 2000, young people with college educations—except those who go to elite colleges and graduate schools—have seen their wages decline. The deepening recession will make this worse. According to a 2008 survey by the National Association of Colleges and Employers, half of all companies plan to cut the number of new graduates they hire this year, compared with last. But the problem goes well beyond the current crisis. For one thing, the growing number of graduates has flooded the job market at a time when many financially pressed boomers are postponing retirement. And college-educated workers today face unprecedented competition from skilled labor in other countries, particularly in the developing world.

    The greatest challenge for Obama will be to change this trajectory for Americans under 30, who supported him by two to one. The promise that “anyone” can reach the highest levels of society is the basis of both our historic optimism and the stability of our political system. Yet even before the recession, growing inequality was undermining Americans’ optimism about the future. In a 2006 Zogby poll, for example, nearly two thirds of adults did not think life would be better for their children. However inspirational the story of his ascent, Barack Obama will be judged largely by whether he can rebuild a ladder of upward mobility for the rest of America, too.

    This article also appears at Newsweek.

    Joel Kotkin is executive editor of NewGeography.com and is a presidential fellow in urban futures at Chapman University. He is author of The City: A Global History and is finishing a book on the American future.

  • A Bailout For Yuppies

    The recent call by the porn industry – a big employer where I live, in the San Fernando Valley – for a $5 billion bailout elicited outrage in other places. Around here, it sparked something more akin to nervous laughter. Yet lending a helping hand to Pornopolis is far from the most absurd approach being discussed to stimulate the economy.

    Some influentials close to the administration may even find the porn industry a bit too tangible for their tastes. After all, the pornsters make a product that sells internationally, appeals to the masses and employs a lot of people whose skills are, well, more practical than ideational.

    As such, they may not even qualify for what is best described as a yuppie bailout, poised to extend the welfare state to the highly educated professional set. After all, George Bush’s bailout of Wall Street has already set a precedent, using public money to secure the bonuses and nest eggs of some of the nation’s most elite professionals. Call it the Paulson principle: In bad times, steer help to those least in need.

    A yuppie stimulus differs from the more traditional approach, which aims to get the front-line, blue-collar types back to work. Instead, it would channel public funds away from those grouchy construction workers – some 30% of whom may soon be out of work – to better heeled, and, in their minds, more deserving “creative” professionals. After all, what stake do the netroots have in making things better for Joe the Plumber?

    In contrast, the yuppie bailout focuses on a sure-fire Democratic constituency, the well-educated urban professional. One advocate of such an approach, pundit Richard Florida, has urged President-elect Barack Obama to eschew crude investments in traditional production and a renewed housing market in favor of goodies directed to what he calls “the creative industry.”

    Florida sees any focus on restoring manufacturing and housing as a misguided rescue of the “old industrial economy,” in which Americans actually made things and other Americans consumed them. Instead, he suggests, “the first step must be to reduce demand for the core products and lifestyle of the old order.”

    So let’s stop worrying about what happens to Detroit, or the crisis in the housing market. In Florida’s view, cars, of course, are demonized as woefully bad for environmental reasons and not particularly friendly to the preferred dense urbanity so attractive to advocates of “hip cool” cities.

    Florida even recommends shifting away from the single-family home, which is also, all too often, in the ‘burbs. Instead, we should develop what he calls “flexible rental housing,” so people can move every time they get new jobs. I think that is what they used to do in Chairman Mao’s China, too, albeit without the granite countertops and a Starbucks around the corner.

    In a yuppie bailout, what spending takes priority? More jobs for academics and educators. Florida suggests we invest in “individually tailored learning.” We assume this means neither home-schooling nor basic skills training but something more like painting and acting classes for tots and advanced “creative” navel-gazing for tweens and adolescents. And, of course, lots and lots of new jobs for well-paid, unionized teachers.

    These ideas should not be dismissed out of hand as the impractical meanderings of a lone scholar. In fact, Florida’s views are taken very seriously among influential Obama supporters at companies like Google as well as by politicos such as Michigan Gov. Jennifer Granholm, who is widely identified as a key Obama counselor on economic issues.

    Nor is Florida alone in his views. Bigger feet among the purveyors of conventional wisdom, like The New York Times‘ Thomas Friedman, also think the stimulus should steer more resources into the public pedagogy. Friedman even recently suggested teachers be exempted from paying federal taxes.

    And it’s not just teachers who would benefit from a yuppie bailout. The economic stimulus, Friedman says, should also focus more on high-tech companies like Google, Apple, Intel and Microsoft, all of which enjoy extraordinary valuations. This reaffirms the Paulson principle with a politically correct spin.

    Politically, a yuppie bailout would certainly appeal to powerful Democratic constituencies, not just the teachers’ unions. Select high-tech companies and venture capitalists can count on new subsidies and tax breaks. Greens and “smart growth” advocates will celebrate if money is diverted from hard infrastructure – such as improved roads, bridges, ports and transmission lines – which they insist would create enough carbon to heat the planet like a toaster.

    This “yuppie first” approach certainly would appeal to many mayors, some of whom are already adherents to the Floridian ideology. They may be further encouraged by a new report by the Philadelphia Federal Reserve called “City Beautiful,” which suggests cities should not promote growth through traditional infrastructure but instead invest in frilly amenities. As a Boston Globe article on the report summarized cheerfully: “Make it fun.”

    Here’s another hint of what might be coming in a yuppie bailout. Providence, R.I., located in the state with the nation’s second-highest unemployment rate, wants to sink money into a polar bear exhibit at its zoo – perhaps so we can see them before they become extinct or go on Al Gore’s payroll – as well as make improvements to a soccer field. Miami envisions spending on a giant water slide, new BMX and dirt bike trails at a local park and, of great national import, a new Miami Rowing Club building.

    Even the once-booming but now-hurting ultimate “fun city,” Las Vegas, wants in on the act. Mayor Oscar Goodman is asking the feds to kick in big time for its new Museum of Organized Crime and Law Enforcement. That’s right, taxpayers can participate in building a monument to Bugsy Segal. And with Nevada’s own Harry Reid running the Senate, the project seems well-positioned to get the “respect” it deserves.

    If Goodman, who used to defend mobsters as a criminal defense lawyer, has his way, it could spark a feeding frenzy for every under-funded tourist trap from Cleveland to Cucamonga. Pork used to mean roads, bridges and ports that, at least in theory, made the economy more productive while providing well-paid work for blue-collar workers. Soon these dollars may instead go toward yacht clubs, art galleries, museums and “creativity” training for toddlers.

    A yuppie bailout is likely to hold more money for Boston, San Francisco and other havens of the perennially hip – all of them Democratic bastions. There’s also likely to be less funding for the grotty suburban towns, industrial backwaters and Appalachian hamlets, all of which don’t usually appeal to the artistic set.

    To an old-fashioned Democrat, this all seems to miss the point. Shouldn’t we be stimulating the places already suffering the most from high unemployment, foreclosures and spreading impoverishment? Where do Toledo, Cleveland or Modesto fit in to the yuppie bailout? As Pittsburgh-based blogger Jim Russell says: “Most of the population will continue to live in ‘Forgottenville.’ Should we just forget about them?”

    In spite of all this, the mounting pressure for a yuppie bailout sadly reveals how the supposed party of the people is being transformed into just a second party of privilege. We should desperately try to create new productive capacity and better-paying jobs, especially for the denizens of Forgottenville. It certainly makes more sense than pouring taxpayer funds into new clubhouses, water slides or even better-financed pornographic movies – however much the latter may help property values in my neighborhood.

    This article originally appeared at Forbes.

    Joel Kotkin is executive editor of NewGeography.com and is a presidential fellow in urban futures at Chapman University. He is author of The City: A Global History and is finishing a book on the American future.

  • Bush: A Disaster to Those He Held Most Dear

    You always hurt the one you love
    The one you shouldn’t hurt at all
    You always take the sweetest rose
    And crush it till the petals fall
    You always break the kindest heart
    With a hasty word you can’t recall

    — Allan Roberts and Doris Fisher

    Like the 1944 pop standard says, President George W. Bush has hurt the most all those he professed to love the most — from the conservative ideologues and born-again Christians to the free-market enthusiasts, energy producers and red state political class. Perhaps no politician in recent memory has done more damage to his political base.

    The most obvious recent equivalent, Richard Nixon, did cause harm to the conservative cause, but that damage was short-lived. It reflected his deviousness more than his policies. Similarly, Bill Clinton’s many personality flaws weakened the Democrats’ hold on the White House, but inflicted no permanent harm to liberalism.

    In contrast, the Katrina-scale disaster that has been the Bush presidency may leave his ideological backers in the wilderness for years to come. Over the past eight years, Bush has done more to undermine conservatism than all of the country’s college faculties, elite media and Hollywood studios put together.

    The late Arizona Sen. Barry Goldwater — whose memory remains far more cherished than that of either President Bush — nurtured the modern brand of conservatism. Nixon employed some of these tenets, but they flourished most fully under Ronald Reagan.

    Conservatism’s core values rested on notions of a strong national defense and free market economics. Bush has punctured these ideas in a way that transcends the effects of historically anomalous scandals such as Watergate or Clinton’s extramarital affairs. Bush has not only dinged the conservative car, he has totaled it.

    Start with the great core issue of national defense. Arguably, Bush’s one success lies in his reaction to the Sept. 11 attacks and the ensuing lack of follow-up terrorist attacks on the homeland. Yet a series of other blunders, notably the war in Iraq, has blemished this enviable record.

    Despite the great efforts of the military, particularly in recent years, to calm that rich but cantankerous country, it is hard to see how it has been worth the cost in life, treasure and international reputation.

    The shoes thrown in Iraq and celebrated around the world epitomize not only ill manners but also the fact that even our supposed friends there don’t like us very much. If history is any guide, Iraq will end up as an authoritarian state with strong anti-American (as well as anti-Israel) leanings. The farther our sons and daughters get away from those ever-scowling people, the better most Americans will feel.

    One unintended part of the Bush legacy will likely be a weaker, highly stressed military. The influential Democratic Netroots will be able to hound the military establishment — whatever President-elect Barack Obama’s intentions. Congress may be reluctant to commit troops to almost anything short of a Chinese invasion of San Francisco, which many Americans — and perhaps some progressive natives — might consider a blessing anyway. Support for new weapons systems, needed or not, will dissipate.

    Bush’s legacy for the cause of free market capitalism may be even worse. Our first MBA-holding president has turned out to be the worst economic manager since Herbert Hoover.

    The bailouts of Detroit and — much worse — the vile Wall Street profiteers now open the door to an unprecedented expansion of invasive welfarism throughout the economy. It’s hard to call proposals that build tennis courts in yuppie towns or subsidize performance artists in Flint, Mich., wasteful after the billions Treasury Secretary Hank Paulson has lavished on his compadres in Richistan.

    In the coming years, the only legitimate opposition to the bipartisan pro-Wall Street policy will come from the scruffy populists of both parties, many based in the heartland regions of the country. Bush may even make quasi-Marxism respectable again. Hearing about $20 billion in new bonuses for government-subsidized Wall Streeters this year should be enough to bring out the hidden Bolshevik in even rational people.

    Ironically, the only people who should be thanking Bush — the environmentalists, the urban gentry, the welfare staters — are the very ones who have despised him the most. Now that he has helped put them in power, perhaps they could host a celebrity fundraiser for the new Bush library in Dallas. Serenaded by Barbra, scolded by St. Al, with a short film by Michael Moore, the program — hosted by Whoopi Goldberg — could help consecrate a lavish new sarcophagus that Bush has prepared for the conservative movement.

    This article originally appeared at Politico. White House Photo by Paul Morse

    Joel Kotkin is executive editor of NewGeography.com and is a presidential fellow in urban futures at Chapman University. He is author of The City: A Global History and is finishing a book on the American future.

  • Stop The Wall Street Bonuses

    These are tough times for Michael Bloomberg’s free-spending “luxury city.” High-end condominium speculators – long considered impervious to the mortgage crisis – are shivering in the bitter cold this winter. Four billion dollars in building projects have been postponed or canceled outright, in large part because Wall Street’s bonus babies are getting a tad less than they are accustomed to.

    Despite this, I would suspect most of America thinks Wall Street, and New York’s financial community, has not suffered enough. Industry bonuses are still expected to total well over $20 billion – small compared to last year’s stupendous $33.2 billion, but not an insignificant New Year’s present for the very people who have played a crucial role in wrecking the world economy.

    By one calculation, this sum breaks down to $137,000 per banker. For middling executives with eight years on the job, bonuses could average $625,000, 15 times the average income for American households. Without the infusion of taxpayer cash, it seems certain that these numbers would have been significantly less. Feel better now, America?

    True, some high-profile top executives wary of facing Congress have announced they will not be taking their stupendous bonuses this year. But these people should be able to scrape by with the tens of millions they bagged last year.

    However, some of the biggest losers – such as bailout-owed insurer AIG – seem to lack even a basic sense of shame. It appears AIG is handing out bonuses ranging from $92,000 to $4 million to some 168 employees. It wouldn’t shock me if some of these fall into the pockets of the same folks whose actions have proven an unmitigated disaster for both shareholders and the country.

    If only autoworkers, unemployed real estate agents and most of the rest of us, who are struggling to make our mortgage payments, had it so good. More important still, this state of affairs is not likely to encourage much faith in the capitalist system here or abroad. If free enterprise is worth anything, it should be about performance, risk and reward. By that standard, there is no justification for any bonuses on Wall Street this year.

    “It’s hard to believe they are still getting bonuses after wrecking so many lives,” marvels Susanne Trimbath, a financial analyst at STP Advisors. “This no longer has anything to do with performance but has become an entitlement.”

    Critically, Trimbath reminds us, we need to remember that some of these same bonus babies are primarily responsible for the housing meltdown that helped undermine the rest of the economy. It was Wall Street’s slicing and dicing of mortgage securities – not just McMansion-hunting suburbanites – that created the financial bases for the sub-prime loans and other excesses in the first place.

    The whole bonus mania, Trimbath adds, contributed to the problem. It encouraged investment bankers to “push the [mortgage securities] crap out the door, because that’s how they could earn bigger bonuses.”

    In the end, the remnants of Wall Street’s legions are still richly rewarded for their handiwork in unraveling the economy. This scenario turns Milton Friedman’s excellent point about the “social responsibility” of business on its head. Friedman correctly suggested that a businessperson’s primary obligation was not to serve some conjured-up idea of the public good but rather to make money for their shareholders and investors.

    One wonders what the late Nobel laureate would say to the same Wall Streeters who are desperate to get props for being green or socially enlightened but have no shame about devastating their investors.

    This spectacle could have long-term consequences for Wall Street’s future as an icon of capitalism. Someone in Congress (presumably not from New York) is sure to call for hearings once people learn of the big bonuses being doled out at bailed-out firms like Goldman Sachs. The class bent to enrich themselves with public largesse, it turns out, includes more than sleazy Chicago politicians.

    A populist rube from the Atlanta exurbs or the Great Plains might even come up with the bright idea to stamp out new bonuses and expropriate some of the ill-gotten gains made in previous years.

    The biggest push back will likely come from Robert Rubin disciples like Timothy Geithner, who will soon take over the Treasury, and the new National Economic Council chief, Larry Summers. Rubin will surely see the logic of Wall Street’s compensation system, since apparently he made over $115 million at Citigroup (where he serves on the board) while the firm has lost more than 70% of its value.

    Along with Bloomberg and Sen. Charles Schumer – aided, perhaps, by the star power of their proposed puppet Caroline Kennedy – these worthies will fight off any attack against the bonus babies. No doubt they will argue such action would harm New York’s economy. Think of what smaller or no bonuses will mean to the dog-walkers, toenail painters, personal trainers and high-end travel and real estate agents of Manhattan.

    ProPublica’s frequently updated map of financial bailout recipients reflects a massive transfer of money from the rest of the country to New York. A few other places – Chicago, Minneapolis, San Francisco – also have licked clean the seemingly bottomless federal ice cream bowl. What about the rest of the country?

    Even New Yorkers should consider whether bailing out Wall Streeters is so great for them in the end. Once among the most recession-proof economies in the country, the Big Apple’s dependence on financial bonuses has made it increasingly subject to the market’s boom and bust cycles.

    Indeed, the perverse effects of the bonus economy may well do more harm to New York than its political leaders let on or even realize. For one thing, it doesn’t create many new high-end jobs; even before the meltdown, industry employment from the last “boom” never reached peak levels hit in 2000.

    What these bonuses foster, instead, is an ultra-expensive environment inhospitable to more middle-class employment, although it does create a boom market for low-end service workers. The cost of living in Manhattan is the nation’s highest, standing at twice the national average.

    Once a city of capitalist aspiration, New York’s economy has devolved into a plutonomy where, in 2007, financial services employees gained a remarkable one-third of all income, much of it in the form of bonuses.

    Meanwhile, the city’s middle-class ranks shrink. The Big Apple now has the smallest percentage of middle-class residents – barely half – of any major urban center. Perhaps even worse, the flow of bonus checks has persuaded successive city governments that it’s not necessary to diversify the economy or cut exorbitant costs.

    Maybe it is time to end the whole way Wall Street operates – for the good of America, New York and indeed the reputation of capitalism. An insane system that overly rewards a few for being in the right place at the right time has outlived its usefulness. A more reasonable way of rewarding performance – and punishing missteps – needs to be put in its place.

    I hope the financial industry takes the lead in making these reforms. If not, change will come anyway – likely in the ham-fisted way that comes naturally to Washington.

    This article originally appeared at Forbes.

    Joel Kotkin is executive editor of NewGeography.com and is a presidential fellow in urban futures at Chapman University. He is author of The City: A Global History and is finishing a book on the American future.