New Geography

Author: Roger Selbert

  • The Case for Optimism on the Economy

    With the prospect of a long, deep recession staring us in the face, are there any reasons for optimism?

    You betcha!

    The central characteristic of the American economy – resiliency – is now being severely tested. But there are ample reasons to believe it will pass that test. Simply put, even after this crisis the US will still have the world’s largest, most dynamic, most productive, most innovative, most technologically advanced, most competitive and most venturesome economy. Combined with population and household growth (the only first-world, industrial economy that can so claim), the US still has the best prospects for sustainable economic growth (which is a good thing, because we will need to return to a growth path to be in a position to solve the many challenges we will be facing in the years and decades ahead).

    What is the case for optimism? Past experience and the fundamentals.

    Globalism
    “If sensible rescue efforts continue – and they will – the immediate crisis will quickly pass. Shell-shocked businesses and consumers won’t recover rapidly from the trauma of recent months, especially as we now cope with recession. But the downturn shouldn’t be prolonged: The economy here and those overseas should start to pick up no later than next spring.” So writes Steve Forbes, publisher of the magazine that bears his family name, in an essay entitled “Capitalism Will Save Us.”

    Despite the crisis, Forbes points out, the global economy still retains enormous strengths. Between the early 1980s and 2007 we lived in an economic Golden Age: worldwide, 70 million people a year were joining the middle class. Even the much-maligned US economy has been doing well in recent years. Between year-end 2002 and year-end 2007 US growth exceeded the entire size of China’s economy.

    As a result, the world is flush with cash. It’s frozen because of fear, but the important things is: cash is there. And the US remains the premier destination for investment capital. So the global boom should resume next year, slowly at first and then with increasing momentum.

    One word of caution: if we continue down the path of criminalizing business failures (think KMPG, Arthur Andersen), we risk undermining the basic idea of limited liability, and the risk-taking it encourages and engenders. That would be catastrophic. Limited liability is arguably the single most important innovation of the modern age, the most significant enabler of the explosive economic growth, development and widespread affluence we have seen since the 19th century. The punitive and costly Sarbanes-Oxley Act, passed in a fit of Congressional pique to punish financial crime, has done no good but lots of harm.

    Monetary Policy, Energy Costs, Housing
    Jeffrey Lacker of the Federal Reserve Bank of Richmond agrees growth will return next year; he expects the US economy to regain positive momentum sometime in 2009 for several reasons. First, monetary policy is now quite stimulative. The federal funds target rate is 1 percent, below the expected rate of inflation. Second, the major shocks that dampened economic activity this past year have already subsided or are in the process of doing so. Energy prices have reversed most of the earlier run-up; that will free up a portion of consumer budgets for spending on other goods and services. And third, the drag from housing seems likely to lessen in the next year, and in fact, we should see a bottom in housing construction around the middle of 2009.

    These are trying times, admits Lacker, but we have weathered economic downturns and banking distress before, both nationally and globally. The fundamental creative process that drives innovation and improves well-being over time has not been mortally wounded, and that bodes well for the long-term.

    Velocity
    If there is a slowdown in the turnover of money – say a 5% decline – the impact on nominal GDP growth is no different than if the money supply itself shrinks by 5%. And that’s exactly what caused the sharp drop in growth (with some panic thrown in for good measure). This sharp drop in growth is due to a temporary drop in velocity, not a typical recession caused by fundamental, economy-changing events such as higher tax rates, tighter money, protectionism or other public policies that stifle innovation or entrepreneurship.

    But there is good news. After ham-handing the rescue operation for months, the cavalry has finally arrived. The Fed has injected massive amounts of liquidity, driving the federal funds rate to roughly 1%.

    Moreover, the Treasury Department has drawn a line in the sand. It has decided that no more banks will fail due to a lack of liquidity. Despite the downside this represents for the ideal of free markets, these actions by the Fed and Treasury will help unlock the credit markets and turn velocity upward. With velocity and the money supply both heading up, a “V” shaped recovery is likely.

    Rather than being the first of several negative quarters of economic growth, economists like Brain Wesbury and Robert Stein of First Trust Advisers predict a healthy period of growth in the second half of 2009. To be precise, they expect real GDP to be flat in Q1-2009 but then grow at an average annual rate of 3% in the final three quarters of next year, with only a temporary hit to earnings. The Dow Jones industrials average should recover to 11,000 by the end of this year, with another 20% climb in 2009 all the way up to 13,250.

    We Have Been Here Before
    The US economy has blossomed for 25 years, and can and will again. If, however, we regress by adopting protectionism, higher taxes, too much regulation and other key policy mistakes, the effect on our economy could be devastating. With the prospect of a new Democratic administration and Congress, these are not insubstantial fears. The Bush tax cuts will expire after 2010 if action is not taken to extend them. The capital gains tax rate will go up; the dividend tax rate will go up; the death tax will jump from 0% to 55% in 2011. These automatic tax increases we have the makings of an economic calamity. Same goes for increased protectionism and new regulations. But it will be with eyes wide open.

    Innovation is Key
    Pessimism about America’s future has been growing, at least until the recent election of Barack Obama. Yet beneath the gloom, economists and business leaders across the political spectrum are slowly coming to an agreement: Innovation is the best – and maybe the only – way the US can get out of its economic hole. New products, services, and ways of doing business can create enough growth to enable Americans to prosper over the long run.

    But here’s the conundrum: If money alone were enough to guarantee successful innovation, the US would be in much better shape than it is today. Since 2000, the nation’s public and private sectors have poured almost $5 trillion into research and development and higher education, the key contributors to innovation. Nevertheless, employment in most technologically advanced industries has stagnated or even fallen.

    The new field of innovation economics addresses this gap between spending and results. Economists are increasingly studying what drives successful innovation to learn how companies can get more bang from the bucks spent on R&D and higher education.

    One of the hottest areas in the field is the use of government aid to cultivate “innovation clusters,” or collections of local companies and academic institutions working together to create new products and processes. Ideally, those alliances would build on existing expertise in a region.

    It’s possible the longstanding partisan debate over tax rates and budget deficits may soon become a sideshow. If it is realized that the main purpose of economic policy is to spur innovation and growth, then the two political parties will have to stop fighting and coalesce around policies that promote innovation.

    So let’s keep things in perspective. Reports of our demise are premature.

    Dr. Roger Selbert is a business futurist and trend guy. He publishes Growth Strategies, a newsletter on economic, social and demographic trends, and is a professional public speaker (www.rogerselbert.com). Roger is US economic analyst for the Institute for Business Cycle Analysis in Copenhagen, and North American representative for its US Consumer Demand Index.

  • The Future of Affirmative Action Under President Obama

    There is going to be a lot of debate on the impact of Barack Obama’s election on the future of affirmative action.

    There has been speculation for months among all sides of the debate about whether Obama’s ascension to the Presidency would provide proof positive that affirmative action is no longer necessary, or at least, has run its course.

    Ward Connerly, a black Republican who has led the fight to ban affirmative action in California and other states, told the San Francisco Chronicle today that Obama’s election decimates “victimhood“.

    Obama has said that his own daughters do not deserve affirmative action because of their economic privilege. As president, asks Joan Vennochi in the Boston Globe, will he lead the way from race-based to class-based policies? Some black leaders, she writes, citing such figures as Eugene Rivers and Kevin Peterson, say Obama’s political success necessitates a new approach to the issue.

    As Ben Smith writes on Politico.com, partisans of both sides of the bitter, long-running wars over affirmative action say Obama’s position on the subject is ambiguous and scarcely articulated. As a state senator in Illinois, he called traditional affirmative action “absolutely necessary,” but he’s more recently called for government to “craft” policy “in such a way where some of our children who are advantaged aren’t getting more favorable treatment than a poor white kid who has struggled more.”

    Some of the staunchest opponents of race-based affirmative action are skeptical of replacing it with a system that takes class into account rather than simply considering merit, but if Obama or the courts were to shift away from existing programs, writes Smith, a focus on class seems the most likely direction.

    Indeed, affirmative action cannot endure if nothing else because the black/white paradigm no longer fits. Ironically the rise of Hispanic Americans (who, by the way, voted for Obama by a nearly 2-to-1 margin) may prove the critical factor here.

    As I have maintained for years, the future of multiculturalism is not fragmentation and segmentation into endless subgroups, but a blurring, mixing and blending of races, ethnicities and cultures. This process is already well under way.

    In Mongrels, Bastards, Orphans and Vagabonds: Mexican Immigration and the Future of Race in America (2008), author Gregory Rodriguez writes that America has become so mixed that racial distinctions are losing their power to categorize and separate Americans from each other:

    Mexican Americans are forcing the United States to reinterpret the concept of the melting pot to include racial as well as ethnic mixing. Rather than abetting the segregationist ethos of a country divided into mutually exclusive groups, Mexican Americans continue to blur the lines between “us” and “them.” Just as the emergence of the mestizos undermined the Spanish racial system in colonial Mexico, Mexican Americans, who have always confounded the Anglo-American racial system, will ultimately destroy it, too.

    How will they destroy it? By making categorization impossible, and hence, meaningless. When racial classification is no longer sensible or even possible, neither are discrimination or affirmative action. And we have long since passed that point. I often use Tiger Woods as an illustration of this: he is a mixture of black, Asian, Caucasian, and Indian (oops, I mean Native American) ancestors, but when asked to identify himself he says, ”I’m Tiger.”

    Another key factor will be interracial dating and marriage. In 1987 slightly less than half of Americans approved of dating between black and whites. By 2007, according to the Pew Center, this had risen to 83%. These changes are most evident among the millennial generation, the very people who will make up the majority of adults in 2050, 94% of whom approve of such matches.

    Already, over 2.5 percent of Americans are of mixed race, and this percentage grows significantly among people under 18, and, geographically, in California, on the entire west coast, and in the New York area. One third of all mixed marriages involve Hispanics. In California, between 1980 and 1997 one of every seven babies born had parents of different races. This notion of race will become ever more fluid as it becomes obvious from DNA testing that people’s racial or ethnic origins are often far more diverse than usually imagined.

    During the 1990s, even interracial marriages between black and whites, once very rare, increased seven times as rapidly as marriages overall. Intermarriages between native-born Hispanics and Asians with other groups covered upwards of thirty percent in the first native-born generation, and over 57 percent in the next.

    These developments are anathema to the diversity/affirmative action industries. Believe me; I have been encountering them on the corporate speaking circuit for years. When I speak (optimistically!) of the American future, of the blending and blurring of races, ethnicities and cultures, and of the individual as the basic sovereign unit of a truly free and diverse society, they start going through the first four phases of grief: denial, anger, bargaining and depression. Regrettably, the final phase – acceptance – is beyond them. They will probably endure, administering preferential treatment for quite a while, as they have been empowered and financed by large, slow-changing bureaucracies: governments, foundations and corporations.

    But the writing is on the wall. A mixed-race candidate has just been elected President of the United States. In the same election, via voter initiative, Nebraska adopted (and Colorado narrowly rejected) state constitution amendments outlawing discrimination by race, sex, ethnicity or national origin. Nebraska has thereby joined California, Washington and Michigan as states where voters have outlawed discrimination by race. According to the American Civil Rights Institute, similar amendments, put on state ballots by voters, will appear in coming election cycles across the country, including in Arizona, Oklahoma, Missouri and Colorado (again).

    What? you thought such discrimination was already illegal and unconstitutional? It is. These state ballot initiatives have become necessary to overturn the system of ethnic favoritism known as affirmative action – the use of racial and ethnic quotas in the bestowal of public and private largesse – which has been codified in both public policy and private practice.

    Obviously, the American people are tiring of a diversity regime that (perversely) demands conformity of thought (also known as ”political correctness,” the phrase Soviet commissars used to enforce Central Party rule). Eventually, the American people themselves, having become a mongrel nation, will also reject racial and ethnic categorization. Hint: watch the dramatic rise in the number of people who decline to state in surveys, questionnaires and the Census itself.

    Dr. Roger Selbert is a business futurist and trend guy. He publishes Growth Strategies, a newsletter on economic, social and demographic trends, and is a professional public speaker www.rogerselbert.com. Roger is US economic analyst for the Institute for Business Cycle Analysis in Copenhagen, and North American representative for its US Consumer Demand Index.

  • The middle class is key to any city’s future

    What are your favorite cities in the US and abroad? Chances are you like cities for their vibrancy, diversity, people, foods, smells, sights, sounds, and opportunities for work, learning, play and life.

    These cities can only exist with vibrant middle classes to do the work, pay the taxes, and sustain life (including birthing the kids that are the city’s future).

    I have had the opportunity to live, work in and visit cities around the world. I have noticed that cities dependent on one industry or activity (such as resort tourism, for example), are not interesting, exciting, vibrant, dynamic, or sustainable. They are missing a middle
    class. There is nothing more depressing and dispiriting than to visit a resort where you are surrounded by the wealthy attendees and minimum-wage attendants. It is laughable when such wealthy patrons then try to ameliorate the situation with low-cost housing and other half-baked solutions. Raising wages for the largely itinerant labor force does not work. You need a middle class.

    Some of our “normal” and “regular” cities are heading down this path. They are losing their middle classes.

    The Decline of Middle-Class Neighborhoods

    Several studies document the trend. According to a Brookings Institution study released last year, as a share of all urban and suburban neighborhoods, middle-income neighborhoods in the nation’s 100 largest metro areas have declined from 58% in 1970 to 41% in 2000. In their place, poor and rich neighborhoods are both on the rise, as cities and suburbs have become increasingly segregated by income.
    Middle-income neighborhoods – where families earn 80 to 120 percent of the local median income – have plunged by more than 20 percent as a share of all neighborhoods in Baltimore, Chicago, Los Angeles and Philadelphia. They are down 10 percent in the Washington area. Only 23 percent of central city neighborhoods in 12 large metropolitan areas were middle income in 2000, down from 45 percent in 1970, according to Brookings.

    In Los Angeles – the most hollowed-out metropolitan area in the country over the past three decades – the share of poor neighborhoods is up 10 percent, rich neighborhoods are up 14 percent and middle-income areas are down by 24 percent.

    There are non-economic consequences for cities that lose a lot of middle-income residents. The disappearance of middle-income neighborhoods can limit opportunities for upward mobility, the authors of the Brookings study say. It becomes harder for lower-income homeowners to move up the property ladder, buy into safer neighborhoods, send their children to better schools and even make the kinds of personal contacts that can be a route to better jobs.

    The Exit of the Middle-Class

    In New York, according to “New York’s Delicate Migration Balance,” a report released by the city’s controller last year, 300,000 residents a year are moving out of the city to other parts of the US, twice the number who relocate to NYC from elsewhere in the country – and that was before this year’s financial meltdown.

    Middle-class families – notably households with annual incomes between $40,000 and $60,000 along with households earning more than $140,000 – make up a disproportionate segment of the army heading for the exits. “Those who leave appear to be younger, better educated and slightly more affluent,” the report says. More than 40% of the adults making up the exodus have at least a bachelor’s degree; 20% have a master’s degree or higher.

    That is devastating news, writes Errol Louis (“Call an ambulance – our middle class is bleeding,” New York Daily News, 9/16/07): “It means the backbone of the city is weakening as hundreds of thousands of teachers, cops, firefighters, bus drivers, security guards, transit workers, barbers and administrators – a big slice of the people who make the city go – give up on New York every year.”

    The report also suggests that a lot of what people think they know about the supposed link between gentrification, housing prices and neighborhood change is wrong: “contrary to the tone of public discussion, New York City is not experiencing an influx of educated, affluent, working age residents.” Louis concludes:

    “Communities, and the city as a whole, thrive when we have many different income groups living side-by-side – civil servants near retirees, welfare moms next door to teachers and carpenters.
    “All are equally valuable, and all need to stay in New York. Inner-city areas especially need a critical mass of adults who can put in the enormous amount of casual time and volunteer effort it takes to raise a neighborhood’s children. The kids need to see – and learn from – all kinds of working people in the streets, parks and libraries. Schools that don’t get time, attention and pressure from middle-class parents are more likely to fail.”

    A Natural or Man-Made Trend?

    In a way this trend is natural, a tale of upward mobility: those who can move to a better neighborhood do. But why do middle-income neighborhoods “tip” towards rich or poor? Why this “big sort?”
    Public policy analysts scratch their heads. Some blame the loss of middle-income neighborhoods on the loss of the middle class itself, but that can’t be it: incomes for all types and in all income quintiles of households have gone up (except for single-female-headed households with kids), although they have gone up faster for higher income households. But there are natural reasons for that too: higher income households have more income earners, with higher skills, working more hours.

    Others blame the bifurcation of housing costs, that is, the lack of affordable middle-class housing. According to a New York University study, the likeliest households to exit in New York were those earning between $40,000 and $60,000 (the solidly middle-class in a city where the median household income is $40,000). Though these made up only 17 percent of non-elderly households in 2005, they accounted for 22 percent of those households that left.

    Any middle-class – or even upper-middle-class – flight is understandable given the chunks of income that New Yorkers pay on housing.

    Of the 110,663 Manhattan homes with a mortgage, nearly one fourth spend at least 35 percent of the household’s monthly income on housing costs, according to Census estimates. Of the 562,469 occupied rental apartments in Manhattan, over 34 percent spend at least 35 percent of the household’s monthly income on rent. Another 8.4 percent spend 30 to 34.9 percent.

    Of the 182,226 Brooklyn homes with a mortgage, over 46 percent spend at least 35 percent of the household’s monthly income on housing costs. Of the estimated 590,843 rental apartments in Brooklyn, nearly 42 percent pay at least 35 percent of the household’s monthly income on rent.

    Others blame sprawl, complaining that exurbs are bleeding cities of the middle class. But it is hard to argue that people’s freedom of choice about where to live is the problem, and that they should be forced to live in expensive, deteriorating cities.
    It’s middle-income jobs, stupid

    In a recent article in City Journal (Summer 2008), “Houston, New York Has a Problem,” Edward Glaeser compares Houston to New York and comes to the conclusion that Houston is preferable because it welcomes the middle class, while a heavily regulated and expensive New York drives it away. It is a devastating comparison:

    “Houston’s great advantage, it turns out, is its ability to provide affordable living for middle-income Americans, something that is increasingly hard to achieve in the Big Apple. That Houston is a middle-class city is mirrored in the nature of its economy. Both greater Houston and Manhattan have about 2 million employees.

    “In Manhattan, almost 600,000 of them work in the idea-intensive sectors of finance, insurance, and professional services; only 2% are in manufacturing, and fewer than that in construction. Finance increasingly drives New York City’s economy as a whole. By contrast, Houston is a manufacturing powerhouse that makes machinery, food products, and electronics, with a retail sector twice the size of Manhattan’s and lots of middle-class jobs.”

    New York used to be a place where a lot of middle-income jobs were created. That’s not happening anymore: from 1975 to 2005, New York City shrank as a regional job hub relative to 12 surrounding counties in Long Island, southern New York and northern New Jersey, according to the Center for an Urban Future.

    Back in 1975, New York City accounted for 53.1 percent of the 5,022,801 jobs in the New York region. By 1980, the city’s share of regional jobs had diminished to 50.5 percent. In 2005 – the last year the figures were tallied – the 12 surrounding counties accounted for 52.8 percent of the 6,171,642 jobs in the New York region.

    No middle-income jobs, no middle class.

    What the Middle Class Needs

    The real obstacle to a thriving middle class in New York is too much government involvement in people’s lives, writes Nicole Gelinas in The New York Sun.

    In housing, for example, constricting the supply of apartments through regulation makes rents, on average, more expensive, not less. As for schools, Medicaid, and other government programs, all of the $58 billion New York spends annually must come from somewhere, and it comes from high taxes. As the city’s independent budget office has noted, state and local taxes within the five boroughs are the highest in the nation, nearly 50% higher than in the average city. Due in large part to these high taxes, big corporations and small businesses alike have a hard time locating middle-class jobs here.

    Living cities must be growing cities that go through constant cycles of renewal of people, economies, and industries. Creative destruction is a necessary city dynamic. This means private-sector job creation. That requires healthy business growth, which adds to the tax base, not public sector job growth, which drains funds from the system.
    There is in fact a “Virtuous Circle” of metropolitan wealth creation: it starts with business growth, leading to job growth, leading to tax revenue growth, making more government services and infrastructure possible, enhancing quality of life for all inhabitants. We all draw from and contribute to this economic food chain. Without it, cities cannot have real life.

    The key to maintaining and growing a middle class is not the government provision of services, benefits and subsidies. It is government provision of the few things government is supposed to provide: protection of persons and property and a social and legal environment which promotes the pursuit of happiness and the general welfare – most fundamentally and importantly, the freedom to start and operate a business without onerous taxation and regulation.

    Dr. Roger Selbert is a business futurist and trend guy. He publishes Growth Strategies, a newsletter on economic, social and demographic trends, and is a professional public speaker [www.rogerselbert.com]. Roger is US economic analyst for the Institute for Business Cycle Analysis in Copenhagen, and North American representative for its US Consumer Demand Index.

  • Sprawl is ubiquitous, even in my beloved Copenhagen

    The year I attended the University of Copenhagen as an undergraduate, I lived in a suburb north of the city and commuted to the central city via bus and rail (the famous S-trains). What a great system, I remember thinking as an impressionable ingénue (you could go anywhere, and trains were on time to the second!). When I returned as a graduate student I lived right in the city center and discovered that great public transit did not obviate the need for extensive walking (I must have worn out five pairs of shoes that year). Besides my two stints as a resident, I have been fortunate enough to return to Copenhagen countless times as a visitor for business, scholarship and pleasure, and I am familiar with the place both as a motorist and public transit user.

    In all the 37 years I have been traveling to and living in Copenhagen, it has always struck me that despite one of the best public transportation systems of which I am aware (in terms of coverage, efficiency, ease of use and affordability), and despite the fact that cars are at least twice as expensive as here in the States (the sales tax on cars is 180%), and despite the fact that gasoline is three to four times as expensive as here, and despite the fact that city parking is difficult, non-existent or prohibitively expensive (and parking fines severe) – despite all of this – rush hour traffic congestion is awful (a constant source of grief and complaint), and the endless streams of cars seem to contain, as in so many cities with lesser alternatives, lone drivers.

    It wasn’t supposed to be this way. The city development plan was designed as a hand with five fingers outstretched – the palm as city center and each of the five fingers as a corridor of residential, commercial and retail development (along rail lines, of course). This was smart growth before the term had been invented. It worked, but what was perhaps unforeseen was that development would also occur in areas in-between and beyond the five corridors. As a result, Copenhagen has become, like so many modern cities, a multi-centered urban metropolis. In order to function in this post-industrial economy and society, residents and workers need to travel freely and frequently to many different points around the metro area, at different times of the day, for different reasons, for different lengths of time, for different purposes. Because the existence of the five corridors has created a defacto hub-and-spoke system, it is difficult and prohibitively time-consuming to use public transit for such travel (and ungodly in winter). So of course Copenhagen has become as car-dependent as Los Angeles.

    Another piece of this picture is that Danes, being a free and intelligent people, prefer suburban living in detached single-family residences over enforced residential density, and prefer owning and driving their own cars over taking public transportation (if given the choice!). So despite a very leftist political orientation among elites, media, academia, government and public policy professionals (including urban planners), and despite a highly socialized component to its otherwise free-market economy, the Danish capital’s suburban job, business and population growth has been outpacing its urban growth for decades.

    According to Ronald D. Utt and Wendell Cox, writing on www.heritage.org (in response to a World Watch report, “City Limits: Putting the Brakes on Sprawl”), from 1950 to 1990 Copenhagen’s population dropped from 760,000 to 465,000, nearly 40 percent.

    Since 1960, the Copenhagen urbanized area (including suburbs) has dropped in population 14 percent, while its land area has expanded 24 percent. And from 1970 to 1990, per capita automobile usage increased nearly 70 percent in the Copenhagen area, while public transit’s market share declined 15 percent.

    This of course is a problem. People are not behaving according to our plans! According to the report “Urban Sprawl in Europe? The Ignored Challenge,” released by the European Environment Agency (based in Copenhagen, by the way), sprawl is affecting almost all of Europe’s cities: “If this trend continues, the European urban area will double in just over a century. Sprawling cities demand more energy supply, require more transport infrastructure and consume larger amounts of land. This damages the natural environment and increases greenhouse gas emissions.”

    The report identifies the key problem as too much local control of urban development decisions, and calls for “urgent action by all responsible agencies and stakeholders to realize common objectives,” or in other words, centralized planning and control. Among the report’s conclusions is this little chill-inducing nugget:

    “The EU has specific obligations and a mandate to act and take a lead role in developing the right frameworks for intervention at all levels, and to pave the way for local action. Policies at all levels including local, national and European need to have an urban dimension to tackle urban sprawl and help to redress the market failures that drive urban sprawl.”

    It’s all pointless, of course: sprawl is ubiquitous, natural, desirable, beneficial, and preferable. As Edward Glaeser (Harvard, Brookings) and Matthew Kahn (UCLA) document in “Sprawl and Urban Growth” (National Bureau of Economic Research), transportation technologies dictate urban form, and in the 21st century the dominant transportation technology is the car. Hence, the urban form of the 21st century is sprawl, or city living based on the automobile. Isn’t this a bad thing? Quite the contrary, per Glaeser and Kahn: “Sprawl has been associated with significant improvements in quality of living, and the environmental impacts of sprawl have been offset by technological change.”

    Robert Bruegmann, author of Sprawl: A Compact History (2005), would agree. He calls sprawl a logical consequence of economic growth and the democratization of society, a pattern of development that has provided millions of people with the kinds of mobility, privacy and choice that were once the exclusive prerogatives of the rich and powerful. Add Bruegmann, Glaeser, Kahn, Cox and Utt to the growing component of anti-anti-sprawl policy analysts such as John Carlisle (Capital Research Center), Peter Gordon (USC School of Urban Planning), Peter Huber (Manhattan Institute), Mark Mills (Competitive Enterprise Institute), Steve Hayward (Pacific Research Institute), Anthony Downs (Brookings Institution), and Harry Richardson (Cascade Institute).

    Copenhagen remains one of my favorite cities, a marvelous combination of the old and new. It has a great quality of life and in my experience, the Danes know how to live it. The central city is charming, and the urban sprawl adds to the possibilities and potentials for all manner of experience and opportunity. I’m already looking forward to my next trip back.

    Dr. Roger Selbert is a business futurist and trend guy. He publishes Growth Strategies, a newsletter on economic, social and demographic trends, and is a professional public speaker. Roger is US economic analyst for the Institute for Business Cycle Analysis in Copenhagen, and North American representative for its US Consumer Demand Index.

  • The future of suburbs? Suburbs ARE the future

    I entered the field of futures research in 1981. No, not futures – contracts to deliver a certain commodity at a certain price at a date certain (God, I wish I had) – futures research, as in scenarios, trends, strategic planning and market planning. Unfortunately the place was soon lousy with what I call “futurism”: extrapolations of the unsustainable to make the improbable look inevitable.

    A current example: suburbs are doomed because of high energy prices (peak oil!), the housing bubble, the obsolescence of the internal combustion engine, and yes, global warming (and what hasn’t been blamed on global warming?). Besides, the urban renaissance is underway; people want to live in the city for the culture, food, music and hipness, don’tchaknow. This is what I read in the Freakonomics quorum on the future of suburbia (New York Times, 8/12/08), and in The Atlantic magazine (“The Next Slum,” Christopher Leinberger, March 2008), The International Herald Tribune (“Life on the fringes of U.S. suburbia becomes untenable with rising gas costs,” 6/24/08), and elsewhere, ad infinitum.

    Well, I could be clever and say that predictions of the demise of suburbs are premature, be in fact they are just plain apocalyptic and absurd. Suburbs are the nexus of American life, have been for decades, and will certainly remain so (because, like, where else are we going to put the next 100 million Americans). Suburbs are where the majority of Americans today, and in the future, live, work, shop, create, consume, recreate, educate and, perhaps most importantly, procreate.

    Suburbs remain home to a majority of Americans and a plurality of American families. Suburban population, business and job growth each outpace those of cities, have done so for decades and will likely continue to do so. In fact, from 2001 to 2006:

    • 90% of all metropolitan population growth occurred in the suburbs (American County Survey, US Census Bureau)
    • Job growth in suburbia expanded at 6 times the rate of that in urban cores (Praxis Strategy Group)

    A small recent surge in mass transit won’t really change this. Of the 130 million Americans who commute to work every day, 41 million – by far the largest number and share – commute within suburbs (i.e. to the same or another suburb). Only 18 million, or 14% of commuters, commute from a suburb to a central city. To put it another way, 60% of commuting is suburb-related in some way. [IAC Transportation (July, 2008)] By the way, 75% of all commuters drive alone in their cars.

    Repeat after me: “multi-centered metropolitan region.” This is the model that characterizes most city/suburban regions in the US, where the urban core is just one of several nodes of development or centers of economic, residential, office, industrial, educational and recreational facilities and life. This is the model that, planned or unplanned, has evolved in the United States. It works, we like it, we’re keeping it. I know, congestion is horrible, but it’s horribly unnecessary: as explained by both Roth in Street Smart and by Stanley and Balaker in The Road More Traveled (both books published last year) [can we find a link to sites for these books] , we have the knowledge and means to reduce or even eliminate traffic congestion (more capacity, and more rational use of current capacity), but we don’t have the political will to deregulate, privatize and build.

    Repeat after me again: “mixed-use.” OK? I’m not talking about New Urbanism or smart growth, which are concepts whose utility and desirability are debatable. I’m talking about the availability, in a suburban setting, to access services and amenities, or what Wally Siembab calls “smart sprawl” – retrofitting suburbs of any density so that residents can shop, obtain services and work all within a mile or two of their home.

    One last point: Telecommuting, small home-based businesses and self-employment make suburban living all the more plausible and sustainable. If you add the number of part-time and full-time telecommuters plus home-based businesses, you’re talking about 36 million Americans, more than a fourth of the workforce.

    Welcome to the future: suburbia.

    Roger Selbert is a business futurist and trend guy. He lives in Los Angeles, edits and publishes the newsletter Growth Strategies, speaks and consults [www.rogerselbert.com]. He graduated from Bowdoin College in 1973, missed his graduation ceremony and has yet to return. But he thinks Brunswick, Maine was a great college town.

  • The College Town Is Obsolete

    The college town occupies a special place in the American consciousness. Small, leafy, brimming with intellectual activity, preparing tomorrow’s leaders – if we haven’t spent years, dropped off kids, or attended a football game in a college town, we have at least passed through one.

    But nothing lasts forever and nostalgia is not the surest guide to the future. Colleges claim their presence brings great benefits to their surrounding regions. Many conduct studies to quantify these benefits, and several come up with figures in the billions of dollars (you can Google the subject for examples).

    Hundreds of articles proclaim the college town as the retiree’s ideal. You can walk on campus! Take workshops! Audit classes!

    Forbes magazine editor Rich Karlgaard has written extensively about college towns being excellent places to start and run small businesses. Available, affordable, high-skill labor! Amenities! Good coffee and wine! Low cost of living (a place where even I can afford to belong to the country club)!

    And every down-on-its luck town wants to become a college town to attract population, businesses and jobs; they dream of becoming the next Silicon Valley, or at least Alley, by providing just the right mix of public policy and social/cultural atmosphere.

    In fact, college towns are stifling, boring, and obsolescent.

    Colleges and college towns have become bastions of intolerance and enforced conformity. Political correctness? That’s not the tenth of it. I’m talking about the stifling of speech, dissent, or any deviation from orthodoxy. Colleges have gone from citadels of intellectual openness to dungeons of intellectual coercion. And in support of what? High ideals such as the canons of Western thought (freedom, liberty, justice, sovereignty of the individual, the inviolability of property rights)? More often, it’s the undermining of the same.

    If this is news to you, you haven’t been paying attention, and you certainly haven’t experienced being flunked for your views (not your scholarship), having your perfectly reasonable points of view confiscated and trashed and/or burned (if they appeared in print), being shouted down, prevented from gaining a hearing, or having your audiences intimidated and threatened, your tenure denied, your application rejected, or your grant stripped.

    [Consult www.Studentsforacademicfreedom.org, or see the film, “Indoctrinate U.”]

    Secondly, for most people college is a waste of time and money. As Charles Murray points out:
    College is not all it is cracked up to be. Dumbed-down courses, flaky majors, and grade inflation have conspired to make the term B.A. close to meaningless. Another problem with today’s colleges is more insidious: they are no longer good places for young people to make the transition from childhood to adulthood. Today’s colleges are structured to prolong adolescence, not to midwife maturity.

    In fact, the entire American system of post-secondary education is wasteful; Murray calls it cruel and insane. The four years and thousands of dollars you spent in that college town to earn a bachelor’s degree in a field such as sociology, psychology, economics, history or literature certifies little and qualifies you for less.

    Advances in technology are also making the brick-and-mortar facility increasingly irrelevant. Distance learning, remote learning – call it what you will – will doom the college town. The Internet renders the college library unnecessary; CDs and DVDs obsolete the 8 AM lecture; email and other advanced communication capabilities make office hours unneeded. Giving up the trappings of a campus will reduce costs dramatically, particularly in an era of high energy prices. Once higher education is exposed to market forces, the rationalization of education will be rapid and profound.

    Of course college towns will still exist: after all, there are still football, hockey and basketball games. There will just be far fewer of them.

    Roger Selbert is a business futurist and trend guy. He lives in Los Angeles, edits and publishes the newsletter Growth Strategies, speaks and consults [www.rogerselbert.com]. He graduated from Bowdoin College in 1973, missed his graduation ceremony and has yet to return. But he thinks Brunswick, Maine was a great college town.

  • Roger Selbert