New Geography

Author: Joel Kotkin

  • Campaign Money and the House Bailout Vote

    The late Jesse Unruh, longtime speaker of the California Assembly, was a giant of a man, both in accomplishment and girth. But he will be forever remembered for having said that “Money is the mother’s milk of politics”.

    Never truer words were said. We got a good glimpse of that in the recent vote on the Paulson-Pelosi Wall Street bailout. A quick survey conducted by the Berkeley, California based Maplight.Org showed that members of Congress in both parties who supported the bailout received 54% more money from the financial service industry than those who voted against it.

    The differential among Democrats was even wider — those who backed the bailout received almost twice as much from Wall Street than those who opposed the measure. A regional analysis conducted by the New York Times showed another interesting pattern, with opposition to the measure strongest in the heartland states, Texas and other places where the housing bubble was less inflated.

    Clearly constituents in these areas reached some of their representatives with complaints. As for those who went the other way, well, somewhere in heaven, California’s “Big Daddy” is wearing a sly, knowing smile.

  • Palin Nomination Leading to Unwarranted Attacks on Small Towns

    You don’t have to believe Sarah Palin is qualified to be vice-President, much less President – I certainly don’t – to understand that her nomination has unsettled many people in our big metropolitan centers. The very idea that a former Alaskan small town Mayor being selected for such high office has elicited an outpouring of scorn towards micropolitan and small town America.

    One prominent recent example is the article by Jennifer Bradly and Bruce Katz entitled “Village Idiocy” published in the Oct. 8 issue of the New Republic. Bruce, who is a very influential figure in urban policy circles, finds praise for small town values an “understandable fantasy.”

    In reality most Americans, as he points out, live in big metro areas. That’s the level where Brookings, and most of our leading policy commentators, believe political power and decision-making should be concentrated – when Washington is not the preferred option.

    Yet Bruce and other compulsive centralizers forget that over one-third of Americans still would like to live in small towns or the countryside – roughly twice as many who want to live in his beloved, high-density cities. Migration patterns show that Americans are moving, on net, more to mid-sized and smaller cities, and within the metropolitan areas, away from the central cities. If the benefits of small town living is a “fantasy,” it’s a widely shared one.

    Even residents of metropolitan areas often regard themselves as residents of their local town or neighborhood. Most local governments remain small-scale, particularly in the vast suburban hinterlands.

    Few residents of greater Los Angeles, for example, feel an emotional allegiance to the “region,” much less than shadowy Southern California Association of Governments. Instead we identify with Irvine or Burbank, Riverside or Ontario. Even those of us who live within the borders of the city of Los Angeles, tend to consider ourselves residents of Valley Village, Leimart Park, Koreatown or Highland Park. If anything has gotten strong in LA over the past three decades, it’s identification with neighborhoods.

    Katz and many of his regionalist colleagues would prefer that all of us look to some centralized regional authority for leadership and inspiration. Although regional organizations have their place, the notion of local control will continue to possess great appeal. Even the nomination of Sarah Palin won’t change that.

  • Back to Basics: The Financial Crisis Requires a Paradigm Shift

    It’s tempting to look at the current financial meltdown – and the proposed bailout – with a Bolshevik mentality. Let’s line up the investment bankers, hedge fund managers up against a wall and spray them with an odorous substance.
    If it were only so easy. Rescuing Wall Street may not solve many problems but letting the investor class implode won’t help many people either.

    What we really need is not a revolution against capitalism, but a paradigm shift within it. We need to move away from fads and quick bucks, and towards productive investment. If we don’t make that shift, the current bubble will simply recreate itself again, perhaps in ill-thought out speculative ventures painted “green” but motivated by the same shortsighted greed.

    Instead let’s stop the whole bubble cycle and get back to basics. That means shifting our investments towards productive activities such as manufacturing and basic infrastructure– and training the critical skilled workers that a ‘real’ economy needs. It means shifting investment priorities by providing incentives for entrepreneurs whose main interest is to build companies, not flip them.

    Over the past decade we have seen a repeated pattern. Americans innovate, start new companies and bring a moribund economy back to life. This takes place primarily in the suburbs and the expanding growth regions. Then the markets heat up and there’s rapid asset inflation. This happened in the late 1990s with dotcom stocks, and more recently in real estate creating a huge wealth effect, particularly in elite cities. Both instances ended with a dispiriting crash.

    Breaking this pattern is an important issue for all of us, but most importantly for our children. America’s robust population growth necessitates rapid long term, and widespread, economic growth. That means moving away from a financially oriented economy to a production oriented one.

    Most Americans cannot sustain themselves trading paper. We also need robust growth in a host of productive industries – energy, fiber, food, manufacturing goods and high-end business services – that can provide decent employment for someone other than Wall Street bankers, well-placed developers and dotcom entrepreneurs.

    For these broader based industries to grow, we need to improve basic infrastructure for moving goods, providing energy and educating skilled workers. American firms in fields from farm equipment and aerospace to textiles still compete with China and India. In an era of high-energy costs, we can drive more of our manufacturing closer to home, if we can provide them with better technological, transportation and human resources.

    Tragically we have ignored both infrastructure and industry. This can be seen from the largest cities to the smallest towns. “One looks back at that map ‘Landscape by Moses,’” writes the noted sociologist Nathan Glazer in looking at the legacy of New York City’s “master builder” Robert Moses, “and if one asked what has been added in the fifty years since Moses lost power, one has to say astonishingly: almost nothing.”

    Indeed, despite the staggering private wealth generated by the stock market and real estate in New York, the city’s public infrastructure has been largely neglected. Its industries are dying and new ones have trouble expanding. There are billions for new stadiums and other elements of Mayor Bloomberg’s “luxury city” but not much for the diverse entrepreneurial firms particularly in the outer boroughs.

    The city controller’s office has estimated that infrastructure spending levels in the late 1990s and early 2000s were barely half of what was required to maintain the city’s streets, main roads, and railways in “a systematic state of good repair.” Subways and rail lines in America’s richest city are frequently shut down after heavy rains due to flooding caused by poor drainage. Brownouts and blackouts, in part caused by underinvestment in energy infrastructure, have become common during summer high-use periods.

    Similarly, California’s once envied water-delivery systems, roadways, airports, and education facilities are in serious disrepair. In the 1960s, infrastructure spending accounted for 20 percent of all state outlays, but as the technocratic perspective took hold in Sacramento, infrastructure spending fell to just three percent of all expenditures, despite the rapid growth of the state’s population.

    Many communities have decided that instead of attending to basic needs, to invest in spectacular new convention centers, sport stadiums, arts and entertainment facilities, hotels, as well as luxury condos. Some have poured money into projects that they think will attract a few big corporate executives with luxury boxes or opera tickets. Others have poured their resources into ways to lure “creative” professionals with edgy museums, jazz clubs and cultural centers.

    These approaches are built around the deluded notion that Americans can thrive simply by being more clever and creative – even more self-fulfilled – than our competitors. China, India, or other low-wage nations won’t be content to concede higher-end economy activity to us. Software design, special efforts, high end legal services, architecture, fashion and even hedge funds all migrate to places where wealth is being created.

    In the coming years, for example, Mumbai, Dubai and Shanghai will employ their enormous wealth – gained in such unfashionable pursuits as writing computer code, drilling oil or making steel – to break into the lucrative businesses formerly dominated by Wall Street, Hollywood or Silicon Valley. You cannot give up productive, wealth-generating enterprises without consequences. Over time this also will hit all but the most elite workers.

    In contrast a policy that focuses both on old fashioned and new, green infrastructure would spur positive impacts on employment across a broad spectrum of activities. We could use new bridges, roads, trains, energy transmission facilities to help resuscitate the Great Plains as well as the beleaguered Great Lakes so they sustainably exploit the natural resources and logistical advantages that made them productive hotbeds in the first place. We can turn our cities, both old and new, into ideal spots for the nurturing of hosts of growing industries by providing adequate skills training, new transportation systems and updated power grids.

    Governments at every level can and should play a critical role in this great project, both in financing physical infrastructure and providing critical skills training. But given the financial realities today, we also need to take advantage of private capital available both here and abroad for such investments.

    So rather than simply rescue Wall Street, or let it hang out to die, let’s figure out how to redirect it. We need to shift incentives away from mindless speculation and the creation of ever more obscure financial instruments. Instead let’s find ways of encouraging investors to make their profits in ways that spur production and widespread wealth creation.

    Joel Kotkin is the executive editor of Newgeography.com.

  • The Generosity of Spirit in Houston

    Many of you might know I am a bit of a Houston fan. It’s not that they don’t have zoning — I am neutral on that issue — but because they have heart. I was privileged to see Houstonians open themselves to 250,000 or more mostly poor and minority evacuees from Louisiana after Katrina. It was an inspiring effort and very ecumenical, led largely by evangelical Christians but including Jews, Muslims, Catholics and anyone else who gave down.

    Now, after Ike, they are taking care of their own, as we can see from a message from Elliot Gershenson to Jeff Mosley (listed at the bottom) at the Greater Houston partnership.

    A lot of cities may be prettier or have better weather than Houston, but in terms of helping neighbors, no big city is better. As Davis Henderson, CEO of the Greater Houston Chapter of the American Red Cross, told me after Katrina, “Who else would have adopted another city like we adopted New Orleans?” Henderson previously oversaw Red Cross operations in Tampa and Chicago. ”In Houston,” he adds, “a neighbor is a neighbor — not a competitor.”

    Urban greatness has many facets, but if I was to pick one, the kind of generosity of spirit Houston has showed would be at the top of my list.

    Here’s the full letter:

    Like so many non-profits, IM has been out of power but still kept going, serving the community. It’s hard to believe that it is possible to serve so many seniors and refugees without computer power and phone service, but somehow we have done so. Just as so many other first-responder organizations like the Red Cross, Salvation Army and government agencies like the City of Houston, Harris County and FEMA have stepped up. We’ll likely hear stories about failed efforts, but the true heart and guts of our city needs to be recognized. There are so many stories of bravery, dedication and pure visionary action that are worthy of telling.

    There’s the story of dozens of churches and other faith groups who have been housing evacuees from Galveston and other places in their gyms and sanctuaries – providing food, shelter and clothing. Much of these expenses will be borne by them. Certainly the time and talent of their core volunteers and staff is being diverted from other programs – all because the people of Houston are heroes.

    There’s the story about crime – not the one we would expect – but how low the crime statistics have been.

    People in Houston have learned how to drive! Somehow, with all those lights out, people have slowed down and let the other guy take a turn.

    I keep hearing that people connected with their neighbors, many for the first time. And now as the electricity is coming back on and the garage openers begin working again, it feels like we’re losing something very special.

    I learned about one church’s senior pastor who received a phone call from someone he didn’t know living back east. The caller said they could not find their elderly parents and were desperate to find out if they were ok. So this pastor got in his car late that night, with a load of food, water and ice and drove across town to find the parents. He drove up to the house and knocked on the door. They were fine, but without electricity or phone, so he called their kids on his cell phone and said “here, someone wants to talk to you.” After the call the parents said they didn’t need anything but across the street there was someone who really looked like he did. So the pastor gave all of his food, water and ice to the neighbor. The next day he came back with more food and water only to find that the neighbor had distributed what he received the night before to his neighbors. The church volunteers returned each day until the electricity came back.

    The president of my synagogue bought Sabbath dinner for 1,250 families who he thought might need a kosher meal. In the end a number of synagogues and the Jewish Federation of Greater Houston backed him up so that he did not need to take this financial burden on his own. Only about 500 families came forward to receive these meals, so in the end he and my synagogue donated enough food to the Houston Food Bank and the Jewish Community Center to feed 700 families and seniors.

    I could go on – but I think you already know what I am talking about. You’ve likely witnessed this yourself and have been amazed by the grace that has been shown by Houston and all of our leadership.

    On that note (about leadership), please let me make a special appeal. Normally this would have been the Tuesday Memo when I showcase the annual United Way campaign which just began. IM is proud to be a significant recipient of United Way funding and we use these funds to serve well over 1,000,000 meals to seniors each year, to make the resettlement of hundreds of refugees the best we know how, and to support our Ready Houston! disaster preparedness and response activities (which has been in full swing these past two weeks).

    My focus always is on the community building elements of the campaign. I have been quoted as saying that if someone gave Houston $1 billion dollars NOT to run an annual campaign, if I were the United Way Board Chair I would turn it down. Not because I am foolish, but because I believe, as important as the money raised is, it is equal䁥

  • A New Model for New York — San Francisco Anyone?

    From the beginning of the mortgage crisis New York and other financial centers have acted as if they were immune to the suffering in the rest of country. As suburbs, exurbs and hard-scrabble out of the way urban neighborhoods suffered with foreclosures and endured predictions of their demise, the cognitive elites in places like Manhattan felt confident about their own prospects, property values and jobs. So what if the rubes in Phoenix, Las Vegas, Tampa and Riverside all teetered on the brink?

    Now only a deluded real estate speculator — or a flack for Mayor Michael Bloomberg — could deny that the mortgage crisis wolf is now at Gotham’s door. Having underwritten and profited obscenely from the loans that launched the crisis, Wall Street is now reeling from the collapse of several of its strongest linchpins, including Lehman Brothers and Bear Stearns, while Merrill Lynch has become little more than an annex to Charlotte-based Bank of America. AIG has been forced on the federal teat and other giants, even Citibank, could be next.

    With perhaps tens of thousands of high-paying jobs about to evaporate, and with them the rich bonuses that fueled Mayor Bloomberg’s grandiose vision of a “luxury city,” New Yorkers should brace themselves for hard times. Bloomberg’s brave talk about media, tourism, bioscience or the arts making up the difference should not be taken too seriously. In reality New York has never been more dependent on Wall Street than it is today, in large part because most other middle class sectors, like manufacturing and warehousing, declined massively over the past seven years.

    As a result, nearly one out of four dollars earned in New York — although accounting for less than five percent of all jobs — are tied to the financial sector. Overall job growth has been slow in finance, and stood well below historic highs even at the crest of the boom, and are now dropping radically. This means, as a result, a group of relatively few big earners are more and more important as overall employment in finance declines.

    Tourism certainly cannot make up the balance since it is a notoriously low wage sector and may soon be subject to a major decline in visitors due to higher airline prices and a growing downturn in Europe. New York has a decent bioscience sector, but Gotham is far as dominant here as in finance or media. There’s strong competition from a host of places, notably St. Louis, Houston, Boston, San Diego and Silicon Valley.

    So where can a plutocratic Mayor look for inspiration for the future? He may not like it but arguably the best model for New York may be San Francisco. More than any American city, San Francisco epitomizes one possible future for American urbanism of the “luxury” variety.

    The parallels between San Francisco and underlying trends in New York, and to some extent Chicago, are striking. Like New York on a smaller scale, San Francisco was once a corporate headquarters town and a powerful financial center. But starting in the 1980s and 1990s that all started to change. Corporations fled for the suburbs, or got merged with firms located elsewhere. It started with the exodus of Crocker Bank. In 1998 its most important company, started by an Italian immigrant in the city, the Bank of America, fled to North Carolina. Like New York, it has flushed away virtually its entire industrial sector and lost ground as a port.

    Yet through this all, San Francisco managed to reinvent itself. First it anchored itself to Silicon Valley, becoming the playground, advertising and media center for the nerdistan to the south. Then, after the collapse of the dot.com bubble, the city fell back on its intrinsic appeal as a place, relying largely on tourism and its ability to attract high-end residents.

    This discreet charm has allowed San Francisco to enjoy a reasonable economic comeback, not so much as a corporate or economic center, but as a high-end destination for the nomadic rich, the culturally curious and the still adolescent twenty and even thirty somethings. Many of this last group have strong skills sets and remain a powerful asset to the city.

    You can see the changes just by walking the streets. Three decades ago, when I worked in the City, San Francisco was still in large part a city of suits and blue-collar workers; today it’s black-garbed cool and casually elegant. There are more wealthy residents and decidedly less minorities, even Hispanics, and ever fewer children.

    This pattern could represent the future — and even the present — in parts of New York and even on the fringes of Brooklyn. We have seen that the “baby boom” in Manhattan does not last much past age five. When Wall Streeters lose their ability to pay for nannies, summer camps, private schools, etc, many affluent families may not be able to hang out that long.

    But then again there are those residents there will not lose their jobs. These include those tied to “luxury” industries, media, and non-profits. Not to be ignored also are the growing ranks of trustifarians, wealthy people living off their parents or grandparents’ labor. These are not the prototypical New Yorker on the make, like Charlie Sheen in “Wall Street,” but they have spending power, connections and often political influence.

    None of these groups are likely to disappear because of a mere trifle like a financial system collapse. These are committed denizens of the urban pleasure dome, content either to live minimally or (for the time being at least) pursue such generally non-remunerative activities like working in the arts or making documentary films.

    Of course, cities like New York and Chicago, also likely to be hard hit by the securities industry meltdown, may not be able to live as richly in hard times like San Francisco. Parts of Manhattan and Manhattanized Brooklyn might endure a metropolitan recession, but it may be tougher on the mostly minority, poor and working class residents who inhabit the outer reaches of the outer boroughs . These residents will suffer from the inevitable cutbacks in city services as well as the loss of retail, hospitality and construction jobs.

    In contrast, “The City,” as San Francisco likes to be known, is both small, compact and surrounded largely by affluent, low-density suburbs. It effectively has no real analogue to the outer boroughs. To see the dark side of America’s urban reality, you increasingly have to go east across the Bay to the crime-infested streets of Oakland, where the once proud dream of civic renaissance appears to be slowly fading.

    Of course, New Yorkers may reject this vision of their future. San Franciscans, have long prioritized joie de vive over imperial visions. In contrast, New Yorkers derive much of their civic self-esteem from their city’s role as the “capital of the world.”

    But if New Yorkers want to keep this slogan to be more than a marketing jingle, they will have to transcend the lame “luxury city” zeitgiest. Spending nearly four billion on new sparkling sports stadiums, and even Bloomberg’s media mastery, won’t get it done. It will take hard work, a commitment to infrastructure and broad-based job growth.

    It’s hard to know if New York still has the stomach for this kind of hard work. As someone whose familial roots in the city span over a century, I hope so. New Yorkers are a resilient lot, as they have shown many times in the past. But if they have lost their appetite for hard struggle, well, they can always consider becoming the next San Francisco.

    Joel Kotkin is Executive Editor of NewGeography.com

  • Charlotte’s Expanding Financial Web

    The takeover of Merrill Lynch by Charlotte-based Bank of America represents another step in the emergence of a true full-tilt competitor to New York as a financial capital. Already dominant in commercial banking, the acquisition places the North Carolina metropolis into the first ranks of cities in wealth management.

    Charlotte’s emergence has been remarkably rapid. When John Harris was growing up on a dairy farm outside Charlotte some six decades ago, it was still a sleepy little southern town. “It was a quiet kind of place back then,” he recalls. “We were a stepchild to the people back East.”

    Today, Charlotte is a stepchild no longer. Taking advantage of a traditional Southern sense of being under-estimated, the leadership in this region of some 1.5 million has worked to become not only a bigger place but an important one.

    “The stepchild always has to work harder,” explains Harris, one of the region’s leading real estate powers. “We’ve always known what it’s like to be ‘have nots,’ not the ‘haves.’”

    Like Houston, Charlotte represents a classic opportunity city, a place built by newcomers used to not getting too much respect. While other New York rivals like Chicago and San Francisco could seem cosmopolitan enough to be real contenders, Charlotte has emerged very much out of nowhere, in a charge led by people who, at least before the last decade or so, seemed like nobodies.

    Charlotte’s ascendancy has not been brought about by a well-developed hierarchy but by entrepreneurs like Bank of America’s Hugh McColl, many of whom came from smaller southern cities to Charlotte in the 1960s and 1970s. In the ensuing decades, through mergers and regional expansion, Charlotte has vaulted past not only its southern rivals but traditional banking power centers like Chicago, Pittsburgh and San Francisco.


    Although Charlotte had been home to banks for generations, two men dominated the city’s ascendancy, McColl and Wachovia’s Ed Crutchfield. Taking advantage of North Carolina’s liberal banking laws, these two dynamic leaders spent much of the 1980s and 1990s gobbling up other region’s banks, including the 1998 takeover of San Francisco’s greatest financial institution, the Bank of America.

    In the process, Charlotte basically wiped out most of its major competitors, and now has more than three times the assets of the remaining San Francisco banks. Today only New York stands ahead of Charlotte — and as the Merrill takeover suggests, what’s left of its humbled financial sector now sits in the crosshairs. Like other opportunity cities, Charlotte has the lure of greater affordability to lure younger talent to their city. The top flight multi-millionaire players may stay in New York and Greenwich for decades to come, but Harris and others believe more and more of the financial industry will continue to migrate to their city.

    “People come down here for the cost of living and the weather,” suggests Buffalo native Joe Riley, a recruiting consultant at Wachovia, who claims 50 percent of his recent hires hail from the Northeast and Midwest. “Everyone misses the food and culture, but it’s great to be in a growing city, and be a part of it.”

    Although banks are important, they are not the only major players. Equally important, Charlotte has become home to other big Fortune 500 employers such as Nucor Steel, Duke Power and Lowe’s. Unlike New York, San Francisco and Chicago, which are all rapidly losing their good blue-collar jobs, Charlotte continues to develop its industrial and warehousing sectors. Over the last 15 years, for example, the Charlotte area has added jobs at a 2.57 percent rate, compared to under one percent for New York, Los Angeles, San Francisco and Chicago.

    Reasonable housing costs and a diversified employment base, notes Harris, allows Charlotte to compete broadly not only at the top levels of management, but across the board far more than a more expensive metropolitan region. “It’s hard to be a mass employer in San Francisco,” he notes.

    Yet, despite the relative advantage of affordability, the financial industry will likely determine the city’s future. Much as Houston has used its port and the energy industry to move from an opportunity to a nascent world city, Charlotte’s business leaders feel that the clustering of financial and high-end business service firms in the area will take them to the next level.

    “Charlotte for years was not quite a world class city but a very large town,” notes real estate broker Louis Stephens. “But now it’s a very fine city that’s trying to be a world class city.”

    The appeal of the area can be seen in the migration numbers. Latino immigrants, for example, feature prominently in both lower-end service, construction as well as skilled trade. The region had among the fastest growth rate in immigration of any major U.S. region over the past decade.

    Equally important, the city, like much of the Carolinas, has emerged in the last decade as a primary draw for people fleeing the high costs and slow job growth of the Northeast. Prominent among these newcomers are a strong wave of educated migrants — since the mid-1990s it has ranked among the top two or three destinations per capita for those with college degrees.

    The popularity of Charlotte among younger educated workers has allowed large companies to find adequate trained staff. Perhaps more importantly — note this New York! — the town has been developing more sophisticated financial firms, including boutique capital market companies, even before the Merrill acquisition.

    Although both Bank of America and Wachovia have been hit by the problems afflicting investment banks everywhere, it would be not be surprising that in the next expansion, more of the action may shift from New York and San Francisco to Charlotte, largely due to its greater affordability. Like Houston after the 1980s energy bust, Charlotte may be well positioned to pick up the pieces even as the finance industry hits the skids.

    “You see a migration of talented educated people from the Northeast and the rest of the world,” notes one native entrepreneur, Tim Stump, who runs his own capital market firm in the city. “There’s increasingly an international dimension here that puts us past the regional playpen. We can play in the national and international market.”

    For all the big city talk among its elites, many Charlotteans understand that their city’s key competitive edge lies not in becoming not too much like New York. Of course, both natives and newcomers alike appreciate the city’s evolving cultural scene, its improving restaurants as well as some very charming, well-maintained urban districts within walking distance of the burgeoning downtown office district.

    But at the end of the day, Charlotte is not New York, and likely will never be. In this sense, history does not repeat itself. What it offers instead is the prospect of a quality of life — a nice house in a good neighborhood, decent schools, particularly in the affordable nearby suburbs, access to the countryside — that has become prohibitive for most in entrenched urban centers.

    “Many people come here kicking and screaming,” Tim Stump observes. “Then they get here and they realize it’s a lifestyle that is abundant and they don’t want to go.”

    “You see people get involved in the arts, the little league, that you have a quality of life where you work hard but you can also be involved in your church and your community. You can live a balanced kind of life here and still be very successful.”

    Joel Kotkin is the Executive Editor of Newgeography.com.

  • Phoenix: Is John McCain’s Hometown Down for the Count?

    By Joel Kotkin and Mark Schill

    Much has been said about the rootlessness of our two Presidential aspirants, but both men have spent their political lifetimes representing real places and specific constituencies. Newgeography.com has already looked into the realities shaping Senator Barack Obama’s adopted hometown of Chicago. Now we turn to the city that has most shaped Senator John McCain’s career: Phoenix.

    In many ways, Phoenix today is what Chicago was in its earlier days: a rambunctious entrepreneurial town subject to sometimes wild swings in its real estate market. This has led some outsiders to predict that the city — known for its sprawling development — is now destined for a long-term decline, a notion that economist Elliot Pollack heartily rejects in his article for us.

    The current decline scenarios for Phoenix echo the “death of suburbia” mantra so eagerly adopted by much of the media and academia since the mortgage crisis and the steep rise in gas prices. A particularly wistful thought in the Great Lakes Region — Obama’s putative home base — is that lack of water will force wayward Midwesterns out of places like Phoenix and back up North where they belong.

    This is nothing new. Phoenix, as Pollack notes, has been down before, as recently as the early 1990s — and to quote the old Rodney Dangerfield line doesn’t “get much respect.” Indeed the entire Phoenician ethos has something to do with poking the folks back east (and sometimes us mild weather weenies here in California) in the eye. There’s a maverick, “you can knock me down but never knock me out,” quality that Senator McCain would no doubt relate to but this sentiment is more epitomized by the city’s greatest political figure, the late Senator Barry Goldwater.

    To many easterners, Phoenix has never been considered a respectable place to build a city. Arizona, to U.S. Senator Benjamin Wade, was “just like hell, all it lacks is water and good society.” Phoenix’s city fathers included “Jack” Swilling, an often inebriated Confederate Army deserter -turned -promoter, and a sturdy group of Mormon farmers, who shared Swilling’s outsider status, if not his taste for alcohol.

    Like Los Angeles, in Phoenix the Second World War accelerated the development of new technology and business service firms. Initially, the desire to base more production further from potentially vulnerable sites on the coasts brought several thousand skilled engineers and scientists to the area. However, later, the city itself — its low-density lifestyle, its brilliant sunshine, its lack of social constraints — brought waves of high-technology firms to the region.

    By the turn of the century, the city not only ranked among America’s fastest growing cities, but also as one of the most attractive to burgeoning high technology and business service firms. In its development pattern, Phoenix essentially followed the model of Los Angeles, but without the beaches, Hollywood or Caltech.

    Like its Californian counterpart, Phoenix epitomized all the clichés of plasticity and impermanence associated with the new American city. In addition, like Los Angeles before it, Phoenix gathered in ambitious newcomers seeking a better life. In the 2000 census, almost a third of residents had arrived only five years or less before.

    Local entrepreneur Deb Weidenhamer, who came to the Valley of the Sun in 1970 and opened an auction business, says the rapid growth and basic openness to newcomers has created unprecedented opportunities for her. “We came with nothing,” she recalls.” We came here because it had wealth that was increasing. You can find opportunities. People come here for a new start and come with ambitions. Longevity here does not matter here. You can be here ten years and it’s like you’re an old fogy – in the east coast you’d be like a newcomer.”

    Virtually all of Weidenhamer’s employees, she notes, also come from outside the region. They create what she calls a “multiplier” effect, with each person bringing new ideas and new energies. “In San Francisco or New York you would have to compete with entrenched companies. Here you can always market the new people,” she suggested at her crowded warehouse. “There’s always a new zip code to service.”

    Much less impressed, however, have been many leading urban thinkers, including many local dignitaries. Its sprawling array of separate districts and its relatively weak downtown has led some critics, like the prominent new urbanist Andres Duany, to conclude that Phoenix is a place where “civic life has ceased to exist.” Duany, like Ralph Waldo Emerson a century earlier, hailed Boston as an example of a superior kind of community.

    Yet for America’s urban future, it is likely that Phoenix, not Boston, or even Chicago, represents the predominant form of the multi-polar flexible metropolis. Like many older metropolis, Chicago and Boston have been either losing residents — particularly middle class families — or growing slowly over the last decade. At the same time, virtually all the fastest growing cities have been places like Phoenix – chock-full of kids and thirty-somethings. That tells you something. As Pollack puts it, “People vote with their feet.”

  • Minority America

    Recent news from the Census Bureau that a “minority” majority might be a reality somewhat sooner than expected — 2042 instead of 2050 — may lead to many misapprehensions, if not in the media, certainly in the private spaces of Americans.

    For some on the multicultural left, there exists the prospect of America firmly tilting towards a kind of third world politics, rejecting much of the country’s historical and constitutional legacy. Some left-leaning futurists, like Warren Wagar envision a nation of people fundamentally torn by “racial conflict.” By mid-century, Wagar sees an America suffering from a “gigantic internal struggle” that will eventually lead to its ultimate decline.

    The xenophobic right, probably much larger but no less deluded, sees the similar potential for mischief, where American values are undermined by what 19th century Nativists called “ a rising tide of color.” It is part of a scenario that the likes of Pat Buchanan and Samuel Huntington envision as the rise “revanchist sentiments” along the nation’s Southern border.

    Yet in reality America’s ability to absorb newcomers represents not so much a shift in racial dominance but a new paradigm, where race itself begins to matter less than culture, class and other factors. Rather than a source of national decline, the new Americas represent the critical force that can provide the new markets, the manpower, and, perhaps most important, the youthful energy to keep our city vital and growing.

    You can see this in all sorts of geographies. The most dynamic, bustling sections of American cities — places like the revived communities along the 7-train line in Queens, Houston’s Harwin Corridor, or Los Angeles’ San Gabriel Valley — often are those dominated by immigrant enterprise. At the same time many of our suburbs are becoming increasingly diverse, a sign of decline according to some urban boosters but in reality just another proof of the ability of suburbs to reinvent themselves in a new era.

    Even small communities have been enlivened by immigrants, where refugees often have an even greater impact than they do on the biggest cities. In the 1990s, newly arrived Bosnians and Russians in Utica, New York were widely seen as sparking new growth and jobs in a stagnating community, bringing values of hard work and sacrifice. “How long before they become Americanized?” asked the head of the local Chamber of Commerce. “Right now all we know is we love them, and we want more.”

    This is where America’s future diverges most clearly from that of its competitors, both the older industrialized societies and the newly emergent powers. In recent decades Iran, Egypt, Turkey, Russia, Indonesia, across the former Soviet Union, and the former Yugoslavia — became more constricted in their concept of national identity. In countries such as Malaysia, Nigeria, India and even the province of Quebec, preferential policies have been devised to blunt successful minorities. Because of such policies, sometimes accompanied by lethal threats, Jews, Armenians, Coptic Christians, and Diaspora Chinese have often been forced to find homes in more welcoming places.

    Europe, too, has received many newcomers, but to a large extent its society and economy have proven far less able to absorb them — a far different result than one would expect from a supposedly enlightened society widely admired by American ‘progressive’ intellectuals. This is particularly true of the roughly twenty million Muslims who live in Europe, but who have tended to remain both segregated from the rest of society and economically marginalized.

    In European countries, it is often easier for immigrants to receive welfare than join the workforce, and their job prospects are confined by levels of education that lag those of immigrants in the United States, Canada or Australia. And in Europe, notably in France, unemployment among immigrants — particularly those from Muslim countries — is often at least two times higher than that of the native born; in Britain, as well, Muslims are far more likely to be out of the workforce than either Christians or Hindus.

    Similarly, European immigrants often separate themselves from the dominant culture. For example, in Britain, up to forty percent of the Islamic population in 2001 believed that terrorist attacks on both Americans and their fellow Britons were justified; meanwhile, ninety five percent of white Britons have exclusively white friends.

    In contrast, only one-quarter of whites in a 29-city U.S. survey reported no interracial friendships at all. This measure of racial isolation ranged from a low of eight percent in Los Angeles to a high of 55 percent in Bismarck, North Dakota. Overall, it’s clear the integrative process in the United States, which over the past century has experienced the largest mass migration in history, is well advanced.

    This contrast is particularly telling when looking at Muslim immigrants. In the United States, most Muslims — themselves from diverse places of origin — are comfortably middle class, with income and education levels above the national average. They are more likely to be satisfied with the state of the country, their own community, and prospects for success than other Americans.

    More important, more than half of Muslims — many of them immigrants — identify themselves as Americans first, a far higher percentage of national identity than is found in western Europe. More than four in five is registered to vote, a sure sign of civic involvement. Almost three quarters, according to a Pew study, say they have never been discriminated against. “You can keep the flavor of your ethnicity,” remarked one University of Chicago Pakistani doctorate student in Islamic Studies, “but you are expected to become an American.”

    Even if immigration slows down dramatically, these groups will grow in significance as we approach mid-century. By 2000, one in five American children already were the progeny of immigrants; by 2015 they will make up as much as one third of American kids. Demographically, the racial and ethnic die is already cast. The forty-five percent of all children under five who are non-white will eventually be the 20-somethings having children of their own. Whether they achieve a majority by 2043 or 2050, many of these Americans are likely to share more than one ethnic heritage.

    So rather than speaking about growing separation and balkanization we are witnessing what Sergio Munoz, a Mexican journalist and long-time Los Angeles resident, has described as the “the multiculturalism of the streets.” Street level realities differ from those seen by political reporters or academics. People still talk about the South, for example, and its racial legacy. Years ago economic leaders in southern cities like Dallas, Atlanta and Houston recognized that to preserve institutionalized racism would be bad for business. By the mid-2000s these very cities, were seen as among the best places for black businesses and families.

    The remarkable progress on race, even in the Deep South, has in many ways forged the path for the new Americans, including Mexican-Americans and Chinese-Americans who have also faced discrimination. More important, the road to economic success, unobstructed by institutionalized racism, will be even more open for their children.

    This does not mean that there remains a great deal of confluence between particular ethnicities and higher rates of poverty. Massive immigration has brought to many cities, such as New York and Los Angeles, large numbers of poorly educated and non-English speaking newcomers. Critics may be correct that current policies tend to foster too much immigration among the less skilled. Although newcomers often increase their wages over time, the influx of even newer arrivals tends to keep wages for groups such as Latinos consistently below native levels, and likely depresses wages for the least skilled natives.

    Immigrants by their very nature constitute a work in progress. In the move to highly skilled positions — including in the blue collar sectors — the average immigrant income grows and the percentage of children who finish high school or enter college tends to rise (in some groups more decisively than in others). Rates of homeownership also rise with time, reaching native levels after about three decades.

    What is too often missing today is a focus on how to spur this upward mobility. This requires less racial “sensitivity” sessions and cultural celebrations, and more attention to the basics that create a successful transition to the middle class — like decent schools, public safety, better infrastructure, skills training as well as preservation and development of high paying blue as well as white collar jobs.

    The bottom line is that neither political nor the cultural arguments about immigration are central to everyday life: Concepts such as “ethnic solidarity,” “people of color” or “cultural community” generally mean less than principles such as “Does this sell?” “What’s my market?” and, ultimately, “How do I fit in?”

    In essence, if the economy can continue to work and expand over the coming decade, America’s increasing racial diversity not only will do no considerable harm, but lay the basis of a more remarkable, unique and successful nation in the decades to come.

    Joel Kotkin is the Executive Editor for Newgeography.com.

  • Skipping the Drive: Fueling the Telecommuting Trend

    The rapid spike in energy prices has led politicians, urban theorists and pundits to pontificate about how Americans will be living and working in new ways. A favorite story line is that Americans will start trading in their suburban homes, move back to the city centers and opt to change everything they have wanted for a half-century — from big backyards to quiet streets to privacy — to live a more carbon-lite urban lifestyle.

    Yet, there has been little talk about what could be the best way for families and individuals to cut energy use: telecommuting. For more than a decade, the number of telecommuters, both full-time and part-time, has been growing rapidly, gaining more market share than any other form of transportation.

    This seems certain to continue with the proliferation of broad-band technology — as well as the effect of high gas prices. By 2006, the expansion of home-based work doubled twice as quickly as in the previous decade, and now is close to nine million, according to the National Highway Travel Survey of the Federal Highway Assn.

    Nationwide, according to the Gartner Group, in 2007 13 million workers telecommuted at least one day a week, a 16 percent leap from 2004. That number was expected to reach 14 million this year. In addition, more than 22 million individuals, according to Forrester Research, now run businesses from home.

    Last year’s skyrocketing energy prices appears to have pushed employers in this direction. A CDW survey of private sector employers this year found that 76 percent now provide technical support for remote workers, up 27 percent from a year earlier. Federal IT support, however, has lagged at roughly 58 percent.

    In some regions, like the San Francisco Bay Area and Los Angeles, as many as one in 10 workers are part-time telecommuters. In the Greater Washington Area, more than 450,000 employees telecommuted at least one day a week in 2007, 42.5 percent more than in 2004, according to a survey by Commuter Connections, a regional network of transportation organizations coordinated by the Metropolitan Washington Council of Governments. The percentage of employees who telework surged to 19 percent from 13 percent during that time period.

    Not surprisingly, home offices, particularly in upscale homes, have become a necessity for many buyers — demanded ahead of security systems. A recent study by Rockbridge Associates suggests that more than one-quarter of the U.S. workforce could eventually participate full- or part-time in this new work pattern.

    The potential energy savings — particularly in terms of vehicle miles traveled — could be enormous. Telecommuters naturally drive less, not only to work but for the numerous stops to and from work. According to the 2005/2006 National Technology Readiness Survey (NTRS), the United States could save about 1.35 billion gallons of fuel if everyone who was able to telecommute did so just 1.6 days per week. That calculation is based on a driving average of 20 miles per day, getting 21 miles per gallon.

    A more recent study by Sun Microsytems, which uses telecommuting extensively, found that, by eliminating commuting half the week, an employee saves 5,400 kilowatt hours — even accounting for home office use. They also can save some $1,700 a year in gasoline and wear and tear.

    Related technologies, like teleconferencing, according to another survey, could save another 200 million tons of jet fuel, if 10 percent of air travel were reduced over the next 10 years. There are other signs of a shift to substitute the web for the road — some college on-line classes report a 50 percent to 100 percent boost in enrollment over last year.

    In comparison, the talk of a huge “surge” in transit riders as a result of rising gas prices, represents a welcome, but relatively minor, trend, since transit still accounts for under 1.5 percent of all travel. The vast majority — perhaps as much as 98 percent —- of the recent reduction in gas consumption came as a result of people simply reducing their driving, not switching to the rails.

    Some of this is structural. Most metropolitan regions are simply not set up for efficient public transit; work patterns are increasingly dispersed as opposed to centralized. As a result, the ranks of telecommuters are greater in every metropolitan area in the country outside of the New York, Chicago, Philadelphia and Boston areas.

    This trend is particularly marked in growing regions in the South and West. In Portland, the mecca for light rail, there are nine telecommuters for every rail commuter. In 2008 Nustats survey, covering Austin, Dallas-Ft. Worth and El Paso telecommuting (at 12 percent) was cited four times as much as using public transit to reduce gas consumption.

    Perhaps even more important, telecommuting and related technologies represent a potential sea change for the future shape of families and communities. Already women are well-represented among telecommuters, in part so they can stay home with their children. In a world with fewer permanent employees and longer hours, telecommuting could help mothers stay in the workplace even while rearing children. A growing number of fathers are also looking to work at home to participate in child-rearing.

    In many ways, this represents a return to patterns that existed before the Industrial Revolution. In pre-industrial societies, members frequently worked at home or walked to work. The Industrial Revolution changed all that, with its need for mass standardization — demanding the efficacy of office and factory. Marx, the ultimate chronicler and prophet of the Industrial age, saw how “agglomeration in one shop” was “necessary” for human progress.

    Writing a century later, Alvin Toffler foresaw how the rise of the “electronic cottage” would return work to the home — where it had been before. As he put it, “social and technological forces are converging to change the locus of work” — back to the home, neighborhood and village. This is part of what Toffler envisioned in his “Third Wave” society, a breaking away from the “behavioral code” of “second wave” industrialism, where work and family were segregated

    These trends will continue as economic relations between business firms become less constrained by proximity. Information inputs can come from any source, and increasingly, any place. Of course, there will be serious constraints to this development. Perhaps, most important, will be the reluctance of managers —both private and public — to allow this dispersed work

    There are also interests, like urban office developers and real estate developers, who might find these trends troubling. Many new urbanists and environmentalists, who one would think would favor this energy-saving trend, tend to ignore or downplay the digital frontier — preferring a return to the dense, transit-dependent patterns common a century ago.

    Even telecommunications firms, which logically should be pushing this shift, seem unable to tailor their products for home-based work, according to a recent Forrester Research study. Morley Winograd, a former AT&T executive, says these companies have persisted in separating their “consumer and business customers.” As a result, they have been slow to abandon what he calls “the obsolete gene” in their corporate DNA, and target the home-based business

    Yet in the future, Winograd, now executive director of the Institute for Communication Technology Management at USC’s Marshall School of Business, says that developers, corporate executives and, presumably, telecommunications companies will be forced to focus more on this growing segment.

    Indeed, new suburban developments, like Ladera Ranch in Orange County, have incorporated such mixed usage into their floor plans — with separate entrances for business clients. Suburban historian Tom Martinson, believes that the Ladera plan will “be in the history books in 20 years” because it anticipates “an incredible change in the way we live and work.

    Many leading companies also see the potential of full-time and part-time telecommuting. Particularly amenable to this trend are leading technology and business-service firms. At IBM, for example, as much as 40 percent of its workforce operates full-time at home. Other companies, including Siemens, Compaq, Cisco, Merrill Lynch and American Express, have expanded their use of telecommuting, with increased productivity

    As more companies let go of their “command and control” approach to management, this practice seems likely to increase. Certainly the employee demand is there; one-third, according to one survey, would choose this option, even if it meant somewhat less pay. Teleworkers also generally show a higher job satisfaction

    This is also being adopted in some states and cities. Georgia, for example, approved tax credits this year for creating and expanding telework.

    But perhaps the biggest impetus, suggests Winograd, the former telecom executive, is the gradual ascendancy of younger workers. The millennial generation — the subject of his recent book, “Millennial Makeover,” co-written with Mike Hais — “have grown up up with the Internet and stay connected to the world on their laptops or cellphones 24/7” and sees “distinctions between work and life as arbitrary and unnecessary.”

    These younger Americans will likely see no reason to spend an hour in a car, bus or train to get from one computer screen to another. Once adopted by employers, this shift may do more to reduce the carbon imprint than all the current calls for largely unwelcome shifts in the daily lifestyles of many American

    Joel Kotkin is a presidential fellow at Chapman University and executive editor of www.newgeography.com. This article also appears at The Washington Independent.

  • The New Deal at 75: An Inspiration, Not a Blueprint

    Whatever your political perspective, Americans need to admire the New Deal for, if nothing else, its ambitious agenda. In a way unparalleled in the 20th Century, the New Deal left us a legacy of achievement – one that we can still see in big cities like San Francisco and small towns like Wishek, North Dakota.

    The great genius of the New Deal lay not in ideology but in its pragmatism and practicality. People were out of work so it created jobs. The country’s infrastructure, particularly in the rural areas, was primitive, so it took on the task of modernization.

    In some ways, this paralleled what was also being done under the Communists in the Soviet Union as well as under Fascists in Italy and under the National Socialists in Germany. This has led some conservatives, such as “Liberal Fascism” author Jonah Goldberg, to conflate the New Deal legacy with fascism. But this assertion is belied by the fact that we still live under a democratic and liberal political structure, one that by the 1980s had turned to oppose much of that legacy.

    Yet I believe that even Ronald Reagan – himself once an avid New Dealer – would admit that the New Deal did much to expand America’s middle class. It did so not by promoting redistribution and welfarism or by moral cajoling – characteristics Mike Lind identifies with the more elite Progressives – but by practical actions that gave people the tools with which to build their own individual prosperity.

    Economically speaking, it is also true that the New Deal failed to recreate prosperity (at least until the onset of the Second World War). But it cannot be denied that it literally brought light to large parts of the country – particularly the Southeast and the rural Great Plains – into the 20th Century. Among the New Deal’s great accomplishments, as Andy Sywak discusses, are its public works.A partial list of these accomplishments include:

    • 22,428 road projects
    • 7488 educational buildings
    • Over 7000 sewer, water and other public buildings
    • Employed over 3,000,000 workers earning who helped support 10,000,000 dependents
    • Employed 125,000 engineers, social workers, accountants, superintendents, foremen and timekeepers scattered in every state and community

    Ultimately, notes scholar Jason Scott Smith, the New Deal touched intimately the lives of more than fifty million out of a total U.S. population in 1933 of 125 million. Yet its legacy went well beyond the Roosevelt years, extending from Roosevelt and Truman all the way to Eisenhower, Kennedy, Johnson and, even to some extent, Richard Nixon.

    As Sherle Schwenninger points out, The New Deal created the basis for the great, and widely shared, national prosperity of the post-war period. Through infrastructure spending, housing programs, the GI Bill and government-funded scientific research, the New Deal directly and indirectly helped make the United States the premier power on the world scene and by far its strongest economy.

    America remains the preeminent country in the world, but there is a great, widely held belief that this status is slipping as other countries – China, Russia, Brazil, India – enact what amounts to their own New Deals. Our once vibrant middle class is under siege, our infrastructure is aging and even “progressives” seem more interested in promoting avant garde cultural values than in economic growth, upward mobility or maintaining technological excellence. Even in the field of conservation, a core value of the New Deal and progressive traditions, the focus is increasing less about preserving resources and open space for people, and more about how to preserve and insulate nature from the ill-effects of human carbon-based life forms.

    Yet if we can be inspired by the New Deal, we can not simply repeat it. For one thing, our crisis today is less palpable and immediate, making it all but impossible to mobilize resources in the same way. At the same time, the public sector, small at the onset of New Deal, has already swollen to gargantuan size. The power of organized public employees, largely a non-factor in the 1930s and 1940s, threatens any government initiative by siphoning off too many local and federal resources due to their often extravagant demands in everything from salaries and work rules to pensions.

    This can be seen in the morphing of the New Deal legacy in large cities including the greatest of all, New York. Under Mayor Fiorella La Guardia, a maverick Republican of the Theodore Roosevelt stripe, the city built new parks, playgrounds, swimming pools, roads, and sanitation systems with an almost messianic fervor. At one time, New York City was receiving one-seventh of all funds dispersed by the Works Progress Administration (WPA).

    Yet La Guardia’s expanded city government, notes Cooper Union historian Fred Siegel, still operated under an efficiency-oriented progressive administration. La Guardia and his parks commissioner, Robert Moses fired political appointees and dismissed incumbents, leading some public employees to identify him with the Italian dictator Mussolini. Rejecting narrow ideology, La Guardia famously claimed: “There is no Republican or Democratic way to clean streets.”

    La Guardia’s successors, in New York and elsewhere, did not stick to this moral and administrative rigor. The share government workers in New York’s workforce expanded from 10 percent in 1950 to over 17 percent in 1970s but with increasingly little accountability. If a new New Deal means a large expansion of the unionized public workforce, in New York or elsewhere, it will be largely doomed.

    So as we admire the achievements of the New Deal, we also need to keep in mind the shortcomings that grew out of its success. That we need a new powerful commitment to infrastructure and economic growth is undoubted, but in pursuing this we need to make sure it does not serve primarily the public employee lobbies and the well-organized rent-seeking private interests.

    New solutions, such as tapping abundant capital resources from both here and abroad, need to be tried out. And given the overconcentration of power already in Washington, and the spread of technical expertise to states and regions, a greater emphasis on locally based initiatives may work better this time around.

    Yet in the end, American still requires some form of broad initiative to overcome its current doldrums. This requires the same kind of bold, innovative and pragmatic spirit characteristic of the New Deal that three quarters of a century later remains its most useful legacy.

    Joel Kotkin is the Executive Editor of www.newgeography.com.

    Other New Geography New Deal articles:

    The New Deal & the Legacy of Public Works
    New Deal Investments Created Enduring, Livable Communities
    Progressives, New Dealers, and the Politics of Landscape
    Public Investment, Decentralization and Other Economic Lessons from the New Deal
    Emerald City Emergence: Seattle and the New Deal
    Excavating The Buried Civilization of Roosevelt’s New Deall

    Other New Deal sites:

    New Deal Network (sponsored by the Franklin and Eleanor Roosevelt Institute)
    New Deal Cultural Programs
    California’s Living New Deal Project