New Geography

Category: Demographics

  • The Entrepreneur is the True Face of Capitalism in America

    “Joe the Plumber” has gotten a lot of media attention over the past week. Depending on which side of the political fence you’re on, he is either a phony who is not even a registered plumber or a symbol for the unintended consequences of wealth redistribution policies. A Rasmussen survey taken on October 19th showed “Sixty-nine percent (69%) of Democrats think [Obama] is right on [spreading the wealth], but 78% of Republicans disagree.”

    It is easy to rail against corporations like Exxon-Mobil while surging gas prices force average Americans to make tough choices with the family budget. In 2007, they reported $39.5 billion in profits which represented 11.4 percent of revenues – up 9.3 percent over 2005.

    Not surprisingly, building popular support to tax windfall profits is easy politically. So, too, is the idea that these taxes should be redistributed to working families. On the other hand, making the case that profits will spur new energy development and reward shareholders seems almost impossible.

    CEO pay, and especially bonuses, are also easy targets for populists. In 2007, major financial firms in New York paid $39 billion in bonuses to themselves. Overall, CEO bonuses increased 27.1 percent in 2006 according to Business Week. The public has trouble understanding how the CEO at Lehman Brothers can make almost $450 million since 2000 and provide millions of dollars in “golden parachutes” to executives even as the firm was failing.

    But the media and the electorate often miss a key distinction. CEOs are not entrepreneurs. They are high paid managers who run the companies that true entrepreneurs built generations ago. Many are graduates of elite business schools who have extensive networks of contacts in business, government and among the “movers and shakers” of our nation. Quite a few are from the nation’s wealthiest families.

    On the other hand, “Joe the Plumber” is a symbol of entrepreneurism – the “little guys” with big dreams. They want to be their own boss. They feed off the soft underbellies of corporations too big or too inflexible to react to changes that create opportunities. Most are hard-working and honest. They don’t have stock options, bonuses or golden parachutes at retirement. In fact, most have many payless paydays when building their businesses.

    Entrepreneurs are America’s job creators. According to the Small Business Administration, from 2003 to 2004 companies with less than 20 employees created roughly 1.6 million net new jobs. Companies with 20 to 499 employees created around 275,000 net new jobs. Meanwhile, employment at companies with more than 500 employees shrank by 214,000.

    The University of Michigan and Florida International University study entrepreneurial activity in America. The metric they use is the number of people who start new businesses or manage firms less than four years old. In 2005, they reported that 23 million people were in this category. Some of the demographics of this group are interesting:

    • 18- to 34-year-olds account for about 44 percent of new firm creations.
    • 57 percent of those starting a new business have high school education.
    • Only 23 percent have finished college.

    Entrepreneurs are the risk-takers in America who know that they are bucking long odds in pursuing their dream. In his book Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By, Professor Scott Shane compiled data tabulated by the Bureau of the Census produced for the Office of Advocacy of the U.S. Small Business Administration and found that only 29 percent of business ventures that were started in 1992 where still around in 2002.

    The entrepreneur is the embodiment of the American spirit and validation of the American dream. Bill Gates epitomized this in the last few decades. He is now using his tremendous wealth for good by funding education and world health programs. On the foundation’s website, Gates lists 15 principals about the role of philanthropy. Principal #7 reflects Gates’s entrepreneurial roots: “We take risks, make big bets, and move with urgency. We are in it for the long haul.”

    The legacy of entrepreneurism can be seen in university buildings, hospital wings, libraries, research centers, foundations and companies that bear the names of entrepreneurs. Most started with a vision to do something new or make something better or more efficiently than ever before. Sadly, many of these institutions, particularly universities and non-profit foundations, seem committed not to fostering more entrepreneurs, but rather to teaching that capitalism is inherently unfair.

    When candidates rail against CEOs and corporate greed they need to be careful that their anger and the populist policies that grow out of it do not spill over into entrepreneurism and extinguish its flame.

    Let’s punish those whose greed for short-term profits has nearly destroyed our economy whether or not they are on Wall Street or in a corporate suite. But we must keep in mind that if we let our anger spill over to extreme new regulation and a new regime of higher taxes, we will also be targeting those “little guys and gals” who want to chart their own course to success. America needs its entrepreneurs perhaps now more than ever before in our history.

    Dennis M. Powell is president and CEO of Massey Powell an issues management consulting company located in Plymouth Meeting, PA.

  • Obama’s Marketing Message

    In less than two weeks, when Barack Obama’s lead in all the polls is likely to be confirmed in the voting booth by the American electorate, millions of words will be written about why he won and how John McCain managed to lose. Unfortunately, marketing executives and corporate leaders have ignored some of the most important lessons from the campaign.

    Obama’s success to date lies in his ability to blend his own persona as a messenger with a unifying and uplifting message that reaches the newest generation of Americans, Millennials, born between 1982 and 2003. His campaign has mastered marketing through social networks and other Internet-based communication technologies. This “cool” approach defeated the “hot” rhetoric that came from his primary opponent, Hillary Clinton, and is likely to perform even more favorably against the more confrontational and traditional campaign of John McCain.

    But Millennials don’t just represent the key constituency behind Senator Obama’s successful campaign but also a key market opportunity for economic growth. Almost one-third of all Americans are in this generational cohort, and even though many of them are still too young to vote, almost all of them influence the daily purchases of the families of which they are a part. Until brand managers and marketing mavens master the art of reaching and attracting Millennials, consumer expenditures will continue to languish.

    CEOs need to learn how to create brands that attract Millennials with something more transcendent than their product’s functionality or characteristics. Corporations will only hit their growth targets if they are willing to change their own message, messenger and media to fit the tastes of this generation.

    A recent study by The Economist magazine’s Intelligence Unit suggests this campaign lesson has not yet penetrated the thinking of many in the “C suites” of the world’s corporations. More than half of those executives said they did not currently have a strategy to target or retain this demographic group. In their report, “Maturing with the Millenials”, survey respondents acknowledged the need for new tactics to target the millennial customer, but indicated a lack of readiness to do so.

    For instance, the report found that, “While 44% indicate that communicating the right messages in the right medium and at the right time is critical to their success, the majority have yet to leverage enriched content, peer recommendations and enhanced online experiences as part of their outreach—even though they acknowledge these are among the most effective ways to communicate with Millennials.” This sounds a lot like Hillary Clinton’s advisors Mark Penn and Mandy Grunwald on the eve of the Iowa caucuses when they derided the supporters of Obama as looking “like Facebook” pages. When Obama’s Facebook legions came out to vote in droves in the Iowa caucuses they dealt a fatal blow to Senator Clinton’s cause.

    Companies, fortunately, do not have to suffer the short shelf life of failed candidates. They can change their strategies in order to capture an emerging new base. We have seen this with companies that have succeeded with emerging ethnic markets at home and with whole new markets abroad.

    Even though most executives surveyed by The Economist understood that Millennials have specific consumer needs, few have tailored their marketing strategy for this generation. Four out of 10 executives in the Economist’s survey said that Web 2.0 technologies, such as webcasts and online forums, are the best way to serve Millennial customers. More than 80 percent agreed that consumer needs vary by age group, and 42 percent believed that a bigger share of investment should go towards Millennial customers. Yet remarkably, the respondents reported that telephone, e-mail and physical storefronts were the top three ways that Millennials could interact with their company currently.

    The risks companies are taking by not addressing Millennials are great. John Gerzema, Chief Insights Officer for Young & Rubicam, details this argument in a new book, The Brand Bubble. His research shows that consumers’ trust in brands has declined by half in just ten years. Instead consumers increasingly turn to nontraditional sources of information, such as search engines and social networks, to determine what they should buy and from whom. That is why any good corporate CEO should check every day what customers are saying about their company on the mushrooming “Why I hate xx” websites that now exist for every major company.

    To restore their brand’s value and regain traction with the buying public, companies will need to reinvent themselves in order to engage Millennial constituencies on Millennial terms and in Millennial media. They will need to learn the art of attracting support from Millennials without appearing to be chasing after it in much the same way Obama did in his campaign.

    One leading-edge private sector example of how to pull off this Zen-like non-effort is Nike’s successful efforts to enhance its brand’s attractiveness by creating online communities of runners. By partnering with Apple it created an application for runners that transfers running time, distance and even calories burned to a Nano so that the results can be uploaded for sharing with others. By building virtual running communities, Nike gave its customers an opportunity to register their individual profiles while receiving content that they can access while running. Nike was able to create its own social network linking people with similar running habits, such as those who run with poodles, to produce a strong bond of affiliation among each member of the group, and from that experience an equally strong sense of loyalty to the Nike brand.

    In 2006, the International Television and Video Almanac pointed out that Americans were being bombarded with about “5,000 marketing messages each day, up from 3000 in 1990 and 1500 in 1960.” Nothing in the trend line for communication technologies suggests this amount of corporate generated content is likely to decrease in the coming decades. Not surprisingly, Millennials can absorb much more information at any single moment than previous generations. But this does NOT mean that they are absorbing information in the same way. To gain the attention and brand loyalty of Millennials, companies will have to turn to non-traditional, online information distribution platforms to create a new message that builds a sense of community and caring around their products.

    The best way to do that is to incorporate a cause or purpose into the reason for buying a product. It may be protecting the environment by going green, or reducing inequality in the world through acts of charity, or demonstrating a commitment to young people by investing in educational institutions, or all of the above. Regardless of the cause, not only did the era of unfettered capitalism end with this month’s financial meltdown, but so too did the days of appeals to consumers based solely on narrow self-interest or conspicuous consumption. Bling is out; doing good is in. Make that your message, and you have a story that will work effectively in the Millennial era.

    Morley Winograd and Michael D. Hais are co-authors of Millennial Makeover: MySpace, YouTube, and the Future of American Politics (Rutgers University Press: 2008)

  • The biggest issue remains undecided

    Unless something completely unexpected occurs, the presidential election has been settled, with Barack Obama the clear winner. Yet, except for the Republican Party’s demise, the most important issue of this era — the future of the middle class — remains largely unaddressed.

    Indeed, even as social polarization has diminished — a change that is reflected in Obama’s electoral success — economic polarization has intensified. Globalization and the securitization of almost everything have created arguably the greatest concentration of wealth since before the Great Depression.

    During much of the 20th century, the middle class was on a roll, with strong income gains and increasing rates of homeownership. But in the past few decades, while returns to capital and to certain elite occupations grew rapidly, wages for lower-income and middle-class workers have stagnated.

    To date, neither Obama nor John McCain has articulated a clear message of how to restore the path to upward mobility. Recent proposals from both candidates have been distinctly ad hoc and have had a short-term orientation — not surprising, given the severity of the crisis and the brief period left before the election.

    Yet over time, how the next president, presumably Obama, addresses the problems of middle-class Americans will determine the future of American politics. The party that captures the loyalty of that class — as Republicans did in the early 20th century; Democrats, from the 1930s to the 1960s; and Republicans, again after that — will dominate the nation’s politics in the coming decade.

    The political future may lie with a party that embraces a growth-oriented economic strategy that focuses on the creation of higher-income productive jobs for both younger and older workers. But it’s far from clear that the Democrats under Obama are ready to play that role.

    Clearly, these are not the Democrats of Franklin D. Roosevelt’s New Deal, Harry Truman’s Fair Deal or even Lyndon Johnson’s Great Society. Working- and middle-class Americans, including small farmers, low-level proprietors and ethnic businessmen, constituted the primary base for those Democrats. Although some leading Democrats, notably Roosevelt himself, came from the aristocracy, the upper classes and most of the corporate hierarchy remained fiercely Republican.

    But now the old class lines have changed. The once-impregnable visual barriers of the past — which separated the ultrarich from the rest of us — have largely dissolved. As Irving Kristol once noted, “Who doesn’t wear blue jeans these days?” Today, you can walk into a film studio, software corporation or high-tech firm and have trouble distinguishing the upper tiers from at least the middle ranks.

    Many of these moguls today tend to be socially and environmentally liberal and strong supporters of the Democratic Party. Yet despite their attire and attendance at U2 concerts, their economic concerns will remain radically different from the rest of society. Having secured their support, a President Obama may be forced to take great pains to secure the fortunes of the likes of George Soros, Robert Rubin, the Google decabillionaires and other big party funders.

    We may have witnessed the birth of this new class in the bizarre alliance of Nancy Pelosi, Harry Reid and Barney Frank with Wall Street’s viceroy, Treasury Secretary Henry Paulson. Once fully in power, these Democrats likely will begin by propping up the financial elites — much as Bush has done — but will also have to make a “grand bargain” to satisfy key party constituencies outside of the financial elite.

    There are already hints of this in Obama’s recent statements. His program to send cash to the poor through tax credits and other largesse can be seen as a political payout to his large, heavily minority, urban constituency. Massive bailouts for failing city, state and county governments — another part of the senator’s program — would also bolster public employee unions and their pension funds, both of which have emerged as key Democratic backers. New handouts for the U.S.-based auto industry, as Obama has recently suggested, would, not coincidentally, help one of the last large, unionized private sectors.

    Sadly, none of this will do more to create upward mobility, particularly for the next generation. The working poor may get a few hundred desperately needed dollars to spend, but this is no substitute for a policy that would stimulate production of jobs. Unions and their pension funds would get an extended holiday from addressing their often outrageously generous retirement and medical benefits, but that comes at the expense of the larger, private work force. The financial elites could secure government support for stabilized markets but would have little incentive to invest in domestic production industries and middle-class employment.

    Finally, Obama’s base of highly educated, socially liberal, professional Democrats — largely insulated in universities and nonprofits from economic distress — would be rewarded with the political validation of their worldviews on everything from gay marriage and diversity to environmentalism. More federal support for education, another likely Obama initiative, could also allow them to keep comfortably feathering their nests.

    Over time, however, such an approach could threaten the unity of the Democratic Party. This prospect emerged in the first House vote on the initial Wall Street bailout package. In addition to economic fundamentalist Republicans, many suburban, exurban and rural Democrats also found the plan objectionable. Hostility was particularly marked in the Great Plains, Appalachia, South Texas and other areas strongly oriented toward energy production, manufacturing and logistics.

    This growing wing of populist Democrats, often more socially conservative than their coastal and urban counterparts, tend to favor steering capital toward sectors such as domestic energy production, agriculture, manufactured goods and domestically sourced specialized services. All these, they believe, could drive up incomes and salaries for a wide spectrum of Americans far better than boosting transfer payments or shoring up investment banks.

    This political approach does not appeal to the urban liberals now dominant in both the Democratic Congress and the Obama camp. These represent places, such as New York, San Francisco and Chicago, that are increasingly more dependent on speculative real estate and financial assets than producing goods. Their primary interest in the next few years will be to find out how to create yet another bubble, perhaps tied to designated “green” industries, which could send local land values and stocks soaring again to unsustainable heights.

    All this, however, leaves the Democrats and Obama in a quandary. They could favor programs to expand industry, energy production and basic infrastructure, but they would risk of a wrathful Gore and his allies. It will take all Obama’s considerable political skill to balance his commitments to the greens, the hedge fund industry and venture capitalists with creating a program that will increase the incomes and prospects for middle-class Americans.

    Republicans could take advantage of this schism — if they have the intelligence and foresight to do so. The GOP could embrace the old Hamiltonian policy of internal improvements and incentives for the country’s industrial, energy and logistics companies that still employ millions of working- and middle-class Americans.

    After all, the legacy of corporate socialism bequeathed by President Bush makes it almost impossible for Republicans to sell themselves as economic libertarians. They will need to offer something to the middle class besides the well-worn politics of social resentment and military belligerence.

    But such a GOP rebirth likely lies in the future, if ever. In the next few years, the Democrats will have to address the nation’s growing class chasm on their own. How they do this may well determine not only the future success of the Obama presidency, but the survival of the American aspirational model, as well.

    This article originally appeared at Politico.

    Joel Kotkin is a presidential fellow at Chapman University and executive editor of www.newgeography.com. He is finishing a book on the American future.

  • 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.

  • Turns Out There’s Good News on Main St.

    As the financial crisis takes down Wall Street, the regular folks on Main Street are biting their nails, watching the toxic tsunami head their way. But for all our nightmares of drowning in a sea of bad mortgages, foreclosed homes and shrunken retirement plans, the truth is that the effects of this meltdown won’t be all bad in the long run. In one regard, it could offer our society a net positive: Forced into belt-tightening, Americans are likely to strengthen our family and community ties and to center our lives more closely on the places where we live.

    This trend toward what I call “the new localism” has been underway for some years, driven by changing demographics, new technologies and rising energy prices. But the economic downturn will probably accelerate it as individuals and corporations look not to the global stage but closer to home, concentrating and congregating on the Main Streets where we choose to live – in the suburbs, in urban neighborhoods or in small towns.

    In his 1972 bestseller, “A Nation of Strangers,” social critic Vance Packard depicted the United States as “a society coming apart at the seams.” He was only one in a long cavalcade of futurists who have envisioned an America of ever-increasing “spatial mobility” that would give rise to weaker families, childlessness and anonymous communities.

    Packard and others may not have been far off for their time: In 1970, nearly 20 percent of Americans changed their place of residence every year. But by 2004, that figure had dropped to 14 percent, the lowest level since 1950. Americans born today are actually more likely to reside near their place of birth than those who lived in the 19th century. Part of this is due to our aging population, because older people are far less likely to move than those under 30. But more limited economic options may intensify this phenomenon while bringing a host of social, economic and environmental benefits in their wake.

    For one thing, they may strengthen those long-weakening family ties. We’re already seeing signs of that. American family life today may not look like “Ozzie and Harriet,” with its two-parent nuclear family, but it reflects a pattern of earlier generations, when extended networks helped families withstand the dislocations of the westward expansion or of immigration.

    With a majority of married women now working, parents are frequently sharing child-rearing duties, and other family members are getting into the act. Grandparents and other relatives help provide care for roughly half of all preschoolers in the country. As the cost of living rises, this trend could accelerate.

    At the same time, difficulty in getting reasonable mortgages and the realities of diminished IRAs will force baby boomers and Generation Xers both to prolong their parental responsibilities and to delay their retirements. This, too, is already happening: According to one study, one-fourth of Gen-Xers still receive help from their parents. And as many as 40 percent of Americans between 20 and 34, according to another survey, live at least part-time with their parents.

    This clustering of families, after decades of dispersion, will spur more localism, which has a simple premise: The longer people stay in their homes and communities, the more they identify with and care for those places.

    This is evident in everything from the mushrooming of farmers markets in communities nationwide to burgeoning suburban cultural institutions. Since the 1980s, suburbs outside such cities as Chicago, Atlanta, Washington and Los Angeles have been building or contemplating new town centers – their own Main Streets, if you will, village squares intended to foster a unique local identity and community focus. Scores of suburban towns have established local orchestras and built playhouses and symphony halls – Strathmore Hall in Bethesda is one example. All this activity has dispelled some of the view of suburbs as strongholds of middle-class torpor.

    “This used to be a place where people went to sleep,” says Patricia Jones, president of the Arts Alliance, a group that helps raise funds for the sprawling, $63 million Civic Arts Plaza in the Los Angeles suburb of Thousand Oaks. “Now it’s a place where people live, work and find their entertainment. It’s a totally different environment. It’s not boring anymore.”

    Not only that, it’s probably more interconnected than ever before. In suburbs and cities from Los Angeles to New York, Web-based community newsletters have sprung up to keep residents informed of goings-on in their neighborhoods and to provide a sense of connectedness. “There’s an attempt in this neighborhood to break down the city feel and to see this more as a kind of a small town,” says Ellen Moncure, who edits the Flatbush Family Network Web site in New York. “It may be in the city, but it’s a community unto itself, a place where you can stay and raise your children.”

    Bolstering the trend are today’s higher energy prices, which make Americans’ old nomadic patterns less economically viable in more ways than one. Take recreation. More and more, says Tim Schneider, publisher of a magazine specializing in sports travel, people are sticking close to home instead of trekking far and wide in search of fun things to do. “Stay cations,” or vacations near home, are taking the place of trips to exotic distant locales. This means tougher times for such traditional tourist hot spots as Las Vegas and Hawaii, both of which have seen a drop-off in flight arrivals due to airline cutbacks. But there’s a moral for cities, says Schneider: Instead of counting on convention centers and arts and cultural facilities to attract outside tourists, most would do better to promote local “place-branding” events such as festivals, rodeos, sports tournaments and the like.

    Higher energy prices may also refocus local economies in unexpected ways. For generations, most Americans have been buying their food from distant corporate providers. But with shipping costs – and food-safety concerns – on the rise, the trend to buy local is moving into the mainstream. In Maryland, the number of farmers markets has grown from 20 in 1991 to 84 today. In 1977, California had four such markets; today it has more than 500. Higher energy costs could also benefit local manufacturers, bringing, say, clothing manufacture back to the Los Angeles garment district from China.

    The final factor driving the localist trend is technology, which has led to a rapid expansion of home-based work and to companies’ setting up work locations closer to where their employees live. The number of home-based workers has doubled twice as quickly in this decade as in the last and is now about 9 million. Nationwide, 13 million people telecommuted at least one day a week in 2007, a 16 percent leap from 2004. And more than 22 million people run home-based businesses.

    A recent study suggests that more than one-quarter of the U.S. workforce could eventually participate full- or part-time in this new work pattern. And over time, it will accelerate localism. Commuting – which became common only over the past century – has cut workers off from the places where they live. Home-based work, by contrast, gives people more choice about where they work and more time to spend with their families and communities.

    Telecommunication allows people who want privacy, low-density neighborhoods and good schools to live in small towns in a way never before possible. It also allows a firm such as Renaissance Learning, a leading educational software company, to set up headquarters in Wisconsin Rapids, Wis., a city of 17,500 whose small-town feeling, broad river and wooded countryside appeal to many workers. “We don’t have any trouble recruiting people here,” says Mark Swanson, the firm’s technical director.

    Yet the desire to stay in the local community isn’t limited to small towns or suburbs. I see it where I live, in California’s San Fernando Valley, or in parts of my mother’s native Brooklyn, where lots of people employed in fields such as the arts, consulting and design work at home or nearby and crowd the coffee shops, restaurants and stores of streets such as Ventura Boulevard in Studio City or once-decayed but now bustling Cortelyou Road in Flatbush.

    In the end, localism is neither urban nor anti-urban. At its heart, it represents something larger: a historic American tradition that sees society’s smaller units as vital and the proper focus of most people’s lives. This made the United States different from Europe, which, as Alexis de Tocqueville noted, has long tended toward centralization of power and decision-making.

    The expansion of the European welfare state has further fostered this trend. But it’s also true that Europeans tend to move less than Americans. And the powerful resistance to the most intrusive forms of European Union integration, such as a continent-wide constitution, suggest that strong localist elements remain imbedded in European communities.

    But if Europe is joining the trend, the United States is likely to be the leader in pushing decentralization. What most impressed Tocqueville wasn’t our large cities but the vitality of our many smaller towns and communities. “The intelligence and the power are dispersed abroad,” he wrote, “and instead of radiating from a point, they cross each other in every direction.”

    Today’s localist revival reflects this tradition, but with the benefit of the great access to the larger world that technology provides. It offers the prospect of an America that, rather than being “a nation of strangers,” can aspire again to be a nation of neighbors . . . in places that we choose for ourselves.

    This article originally appeared in the Washington Post.

    Joel Kotkin is a presidential fellow at Chapman University and executive editor of www.newgeography.com. He is finishing a book on the American future.

  • The Geography of Inequality

    The global financial crisis has drawn greater attention to the world of the super rich and to the astounding increases in inequality since 1980, returning the country to a degree of inequality last seen in 1929 or perhaps even 1913. In the year 2006 alone, Wall Street executives received bonuses of $62 billion. Financial services increased from 10 percent of all business profits in 1980 to 40 percent in 2007, an obscene and indefensible development that now threatens the rest of the ‘real economy’.

    Here’s what happened to income and wealth between 1970 and 2005

    These figures reveal an inexorably growing concentration of income and wealth, which has taken place under both Democratic and Republican regimes. Conversely, given inflation over the last 35 years, lower and middle classes receive smaller shares. Only the affluent – the top 10% – and the rich – the top 1% – have gained ground.

    This pattern of inequality also has a geography with variations across the country between different places (here counties). Generally between 1970 and 2000 the greatest inequality has developed in the largest metropolitan regions and their suburbs.


    Large metropolitan core counties are by far the most likely to have higher inequality. In contrast other geographies have much lower inequality, with small metropolitan, small city and rural counties near the national average. In other words, core metropolitan counties are skewed toward greater inequality (higher shares of very rich and of very poor), while suburban and exurban areas generally exhibit lower inequality (values bunched centrally, with fewer extremely rich or poor households).

    Overall the greatest inequality lies in the very largest metropolitan cores (Los Angeles, Chicago, New York, Houston, etc), areas with large racial or ethnic minorities (e.g., in FL, TX, CA and much of the South), as well as in selected large northeastern metropolises (suburb as well as core, as in Chicago, Cleveland, Pittsburgh, New York, Philadelphia, and Washington DC) and across the southern half of the country more generally. Lower inequality occurs mainly in suburban or small metropolitan counties, and mainly in the north.

    Among smaller metropolitan (< 50,000 households) and non-metropolitan counties there emerges a truly dramatic north-south cleavage just around the Iowa border and along the Ohio River divide. A more mixed pattern prevails in the west and in the northeast, where intermediate levels of inequality are common. Especially high rates of inequality characterize racial and ethnic minority areas and Appalachia, as could be expected, but also many environmental amenity areas, especially in the west. Low inequality is fairly extensive in the hinterlands of selected Great Lakes and upper Midwest metropolises, like Omaha, Minneapolis and Chicago. Generally more egalitarian areas boast higher incomes, female labor force participation, more shares in manufacturing, greater incidence of husband-wife families, of whites, of home ownership, but lower percentages of government and service jobs, fewer residents with less than a 9th grade education, people 18-24, singles, single parent families, and less Blacks and Hispanics. High levels of inequality are generally the opposite of the egalitarian areas: more minorities, single parent families, less manufacturing and dependence on government as well as service sector jobs. Inequality varies by both kinds of settlement geography and by the social and economic character of areas. The most obvious and visible attributes that signify greater inequality are social characteristics: racial and ethnic minorities, low levels of education, low proportions of traditional husband-wife families (partly because of fewer earners), and high dependency (many of the very young and very old). Unequal places tend to be those with low concentrations of manufacturing and higher shares of both managerial-professional occupations and service jobs. Geographic impacts vary. Most rural, newer suburban and exurban areas tend to have lower inequality because they tend to maintain middle income homogeneity. Yet rural areas that are isolated and have weak economies, like Appalachia, suffer high inequality. Large metropolitan areas with the highest inequality also tend to have large concentrations of racial minorities and of non-families, especially young singles Overall it is clear that inequality has been on the rise since 1970. This was a time when the nation was prosperous, manufacturing was strong, as were unions, income taxes fairly progressive, while “war on poverty” legislation had helped those at the bottom, the baby boom was still on and families dominant. But if the extent of inequality has grown, its geography has changed far less. Large metropolitan cores had the highest inequality in 1970 and 2000, and metropolitan suburbs and exurbs the lowest, with small cities in between. Yet inequality grew fastest in large metropolitan cores and suburbs. Small metropolitan areas (many were small cities in 1970) had the next highest increase (80 percent) and rural small town areas the lowest (69 percent). Sadly, only a few counties had decreases in inequality. Many were military base counties, mainly in the south. Another group of counties with lower inequality are new suburban counties, which have become more uniformly middle class as a result of significant urban growth, mainly in the South with more rapid urban and industrial growth. Overall, the change in inequality between 1970 and 2000 was substantial and wide ranging. The causes for this tend to be national and structural, including deindustrialization, the rise of a service economy, the decline of the traditional family and tax changes favoring the very wealthy. Areas that traditionally were most unequal – notably the great global cities – have simply become more so. It is here, in the command and communication centers of the economy, that the greatest wealth has been accumulated and where we can see the rise of a new aristocracy nevertheless dependent on a large low wage service class. The next Administration and Congress should start to address these trends or the traditional American dream will become, for most citizens, no more than that. Richard Morrill is Professor Emeritus of Geography and Environmental Studies, University of Washington. His research interests include: political geography (voting behavior, redistricting, local governance), population/demography/settlement/migration, urban geography and planning, urban transportation (i.e., old fashioned generalist)

  • Resources and Resourcefulness – Welcome to The Real Economy

    By Delore Zimmerman

    The orchard-laden foothills of North Central Washington’s Wenatchee Valley are resplendent at this time of year. The apple and pear harvest is in full swing. The warm golden hues, the crisp mountain air and the bustle of trucks carrying produce to markets near and far provide a stark and welcome contrast to the daily barrage of bad news about the downward spiral of the nation’s financial markets.

    In places like New York, Chicago and San Francisco we can see the result of the demise of once-vaunted vapor traders. They created nothing but debts and are leaving whole economies in shambles.

    But in the Wenatchee Valley one can clearly see the fruits – both tangible and figurative – of the real economy. Over the course of almost ten years a determined coalition of community and business leaders has been working hard and working together to build an economy of substance and promise. The results of their efforts include a picturesque and vital downtown, a thriving and growing fruit and wine industry, a riverfront soon to be animated with housing and community recreation facilities, and a Yahoo data service center.

    These diverse elements make for an economy whose benefits are substantial and meaningful for the people of that region. The City of Wenatchee and the Port of Chelan County are the driving forces behind these initiatives. But the Wenatchee Valley’s success also can be traced directly to the investments and commitment of numerous private and government partners from within the region and from the outside. The Chelan County Public Utility District, for example, operates three hydro projects that deliver clean, renewable, low-cost energy to local residents and to other utilities that serve 7 million residents of the Pacific Northwest. The PUD operates a utility system that now includes local water, wastewater and wholesale fiber-optic services in addition to electricity.

    To capitalize further on its hydro power resources leaders in the Valley are aggressively pursuing an Advanced Vehicle Innovations (AVI) initiative. The AVI Consortium was conceived by the Port of Chelan County in 2005 to establish North Central Washington as a catalyst and center for development, demonstration, and deployment of flex-fuel plug-in hybrid electric vehicles. These are vehicles propelled by a combination of electricity-from-the-grid and bio-fuels (i.e., bio-diesel, ethanol). Both of these energy resources are in plentiful supply in the region.

    So here’s a lesson for our nation’s next stab at building a prosperous national economy. Put the money in the hands of those who can harness local and regional resources and make something useful out of them. It can be fruit, a manufactured product, or a service like data processing. The result is a community that, although not immune to the Wall Street tsunami, retains tangible assets that will survive the current storm.

    This real economy is working right now in the Wenatchee Valley. It also exists in many other communities and regions throughout the nation, from the Dakota plains to the energy corridor around Houston, and the growing industrial districts of the Southeast. These places represent the bright face of America’s future economy. If only they were taken more seriously by those – our nation’s leaders and so-called financial wizards – who are now driving us towards an era of darker expectations.

    Delore Zimmerman is President of Praxis Strategy Group and Publisher of NewGeography.com

  • Obama: A Campaign Model for the Information Age

    Senator Barack Obama has run the first campaign of the information age, and win or lose he has set the standard for how campaigns will be run from this point forward.

    He has parlayed his inspirational speeches and personal appeal to the millennial generation into a base of small donors likely unequaled in modern election history. His campaign understood the power of the Internet and social networking and successfully used it as a resource to create political buzz about him and build a fundraising juggernaut.

    It was the breadth of Obama’s fundraising base that positioned him to bring the Clinton campaign to its knees in the months following Super Tuesday. Clinton’s “big dollar” donors had “maxed out” expecting a quick and decisive victory in February. The lack of financial resources available to Clinton in the months after Super Tuesday allowed Obama to campaign in the marginally significant electoral states and build his delegate count using tens of thousands of $25 contributions.

    It was the Obama campaign’s ability to replenish its coffers, spend and reload again and again that was a — it not the major — factor in derailing the Clinton nomination that a year ago seemed all but inevitable. Obama was able to fight a protracted war, because he has built long supply lines. Clinton went for the early knockout and ran out of gas.

    Obama’s fund raising advantage has reflected more the way he built his base of support than the momentum he had at that point in the campaign. According to the Center for Responsive Politics, Obama had raised $454 million as of August 31, 2008. The website www.opensecrets.org reports that 94 percent of Obama’s funds come from individual donors and 51 percent of Obama’s contributions are $200 or less.

    When compared with John McCain’s base, Obama has much more in reserve. Obama has amassed 95,000 more small contributions than McCain. He has 10,700 more contributions of $2,300 plus than McCain, but this number represents only 30 percent of Obama’s total compared to 49 percent of McCain’s total in this category. And, 16 percent of McCain’s contributors are “maxed out” as compared to 9 percent of Obama’s.

    It is even more interesting when you break it down to gender. Female donors comprise 42 percent of Obama’s base and 28 percent of McCain’s base of financial support. Females donors account for 71.6 percent of the total contributed by males to Obama while McCain’s female donors reflect only is 38.3 percent of total male giving. In the category of donors from $200 – $499 Obama’s base of female donors outpaces McCain’s by a ratio of 3.4:1.

    Obama has built his political organization around his fund raising base rather than vice versa as is usually the case in political campaigns. This is critical in building his “machine” in states like Virginia, North Carolina, New Hampshire, and Colorado, where he is either winning or close to it.

    The beauty of this model is that after the television ads have gone dark and the radio ads ring hollow, Obama is only a mouse click away from continuing the conversation with his base.

    On Election Day, Obama will have more than 2.5 million investors who are almost certain to vote. The campaign infrastructure that he has built will enable him to contact them and focus them as a resource throughout Election Day. This may well decide the election for Obama. But win or lose he has set the bar for future candidates in terms of building a base of fund raising support.

    Dennis M. Powell is president and CEO of Massey Powell an issues management consulting company located in Plymouth Meeting, PA.

  • Restless Americans: Migration and Population Change, 2000-2007

    Americans may be less mobile than in the past, but millions since 2000 have continued to be on the move, reshaping the landscape and economy of the nation. Three maps will be briefly discussed: one of population change by county, 2000-2007, one of net internal migration by county, and one of net immigration from abroad. We will then focus on the “extremes”, unusually large levels or intensities of net internal migration and of immigration.

    Overall population growth

    As was true in the 1990s, big growth has concentrated overwhelmingly in selected metropolitan regions — and within them, primarily in their suburbs and exurbs. The big growth areas are concentrated in Texas (Houston, Dallas-Fort Worth, San Antonio, Austin), greater Atlanta, North Carolina (Charlotte-Raleigh), most of Florida, the Virginia and Maryland suburbs of Washington-Baltimore, the desert Southwest (Riverside-San Bernardino, Las Vegas, Phoenix, Tucson). Substantial exurban or spillover growth was common, with the Bay Area extending into California Central Valley, in far exurban New York and Pennsylvania as well as in largely once rural counties around such places as Salt Lake City, Denver, Portland, Seattle, Minneapolis, Chicago, Kansas City, Nashville, Indianapolis and Columbus.

    Many smaller metropolitan areas grew, especially in the south and west. Many counties with universities appear to have also grown, notably in the South. Many rural or small-town counties with substantial growth boasted environmental amenities and a strong ‘quality of life’ appeal.

    The only big population losses were New Orleans and vicinity, but there were also vast rural small town areas with small losses, characterized by continuing out-migration, but often also by natural decrease, more deaths than births (870 counties), and covering the Great Plains, but also much of the Midwest, Appalachia and the Northeast.

    Overall the population grew by 20 million, 12 million from natural increase, and 8 million from immigration. Around 80 million Americans “migrated” (moved across a county line), 28 percent of the population, resulting in net gains of over 10 million in gaining areas, and net losses of the same 10 million to losing areas.

    Immigration

    Net immigration into the US was almost 8 million in seven years, raising the legal/known share of the foreign born to almost 12 percent of the population. There were hundreds of counties — rural, small town and small metropolitan — where immigrants landed to take agricultural and industrial jobs or to work in service jobs or in construction. This trend is exemplified by a set of counties in far southwestern Kansas (which also had high internal out-migration—mostly Hispanics moving to meat-packing jobs) and to environmental amenity ski-resort counties in Colorado (construction, service).

    The largest immigration flows continued to flow to metropolitan areas, including many large core central counties, many of which were losing heavily among domestic migrants to their suburban and exurban fringe counties. The 21 largest losing counties lost a net of 4.7 million, but gained 3.5 million immigrants. Some 40 percent of the 8 million immigrants were destined for just 8 metropolitan cores, most notably Los Angeles-San Diego, New York City, Miami-Fort Lauderdale, San Francisco-Oakland-San Jose, Chicago, Dallas-Fort Worth and Houston.

    Internal Migration

    The story of gains and losses from internal migration is a little more complex. Gaining counties attracted around 45 million migrants and sent out around 35 million, for a net gain of over 10 million. One obvious feature from the maps is the “donut” phenomenon, the prevalence of large central county net out-migration, surrounded by a ring of substantial suburban and exurban net in-migration (about two-thirds of which is from the central core counties).

    This pattern is particularly marked in Houston, Dallas, Miami, Minneapolis, Washington, DC., Atlanta, Denver, Portland, Kansas City, Memphis, Nashville, and Indianapolis. In the cases of Los Angeles, San Francisco, Seattle, New York and Philadelphia, the ring of growth has pushed beyond the suburban counties to adjacent areas – as to the Central Valley of California or to NE Pennsylvania and Delaware.

    Some core areas did gain, mostly and Southern communities such as Phoenix, Las Vegas, San Antonio, Charlotte and Raleigh, NC, and Knoxville, TN — southern and of more recent importance. In many of these areas the “core” county also includes many areas which might be considered suburban. In this sense, the fastest “urban growth” took place in relatively low-density, auto-dominated regions as opposed to traditional urban cores. Finally, and most obvious on the map, is the continuing high growth of central Florida across most counties.

    In contrast there are places so hurt by de-industrialization that the entire (or most) of the metropolitan areas have substantial out-migration. These include places like Detroit, Cleveland, Pittsburgh, Buffalo, Rochester, and Boston. In some places, notably Pittsburgh, even suburban areas are losing population.

    Rural and small towns also show their own dynamics. There is also continued net-out-migration for almost half of rural small –town counties in all parts of the country, but especially in the Great Plains and Midwest and in the Mississippi delta. But on the other hand, we can see continuing f net in-migration to environmentally attractive areas, often for retirement or recreation, notably in parts of the west, but also in the Ozarks and other areas in the south, upper Midwest and Northeast.

    Conclusion

    The constants here are (1) the restless mobility of the population, (2) the dominance of suburban growth; and (3) the continuing decline of more than half of rural small-town counties. Prominent in recent years, but uncertain in the longer run are (4) our strong dependence on immigration (40 percent of net national growth), (5) the locus of fastest growth in exurbia, (6) the decline of northeastern and Midwestern industrial regions; (7) the rapid growth or rural environmental amenity counties and (8) the specific set of fast-growing metropolitan areas.

    Given the severity of economic conditions, immigration could begin to slow as a result of declining employment opportunities or political opposition. Similarly exurban expansion could slow because of the housing credit collapse. It is not impossible that older industrial areas could partially recover (ample plant and housing stock) while environmental amenity areas could be hurt by recession and the housing collapse. This could also apply to some of the fastest gaining areas 2000-2005 — notably Florida and southern California — that have been the hardest hit in the 2007 on housing debacle.

    But I believe American society is resilient, and even with needed constraints on excessive housing finance abuses, and even if we are indeed approaching the era of “peak oil,” the geographic settlement pattern of recent decades most likely will persist. People will continue to migrate for the same reasons they have for decades — in search of cheaper, larger houses, for jobs, warmer weather or scenic beauty. So we can expect, as the financial crisis gradually recedes, continued growth in suburban, exurban and satellite zones of metropolitan areas, and a net flow southward and to amenity areas.

    Richard Morrill is Professor Emeritus of Geography and Environmental Studies, University of Washington. His research interests include: political geography (voting behavior, redistricting, local governance), population/demography/settlement/migration, urban geography and planning, urban transportation (i.e., old fashioned generalist)

  • An Investment Agenda for the Millennial Era

    By Morley Winograd and Michael D. Hais

    Historians will mark 2008 as the year that started the fundamental political debate that will define America in the Millennial Era. This is not just because Millennials (young Americans born from 1982 to 2003) have propelled the candidacy of Barack Obama but also because their entire civic orientation is now permeating the policy debate crystallized by the nation’s unfolding “financial Pearl Harbor”.

    Clear indications of a shift can be seen in the adoption of the bipartisan bailout proposal and many cases of agreement across partisan lines on what needs to be done now. Both liberals like former Clinton Labor Secretary Robert Reich and conservatives such as former House Speaker Newt Gingrich agree that America should reinvest in its physical infrastructure. They were equally supportive of the need for the country to invest in human capital through a new educational system that would enable America to compete in the global economy. They each acknowledged the necessity for a health care system that would alleviate an ever-increasing financial burden on American families and businesses. From previously and presumably irreconcilably opposite sides of the political spectrum, Reich and Gingrich sketched out an economic growth agenda they could both support.

    Their conversation demonstrated one critical new reality: the demise of the ideologically driven Baby Boomer era of American politics. Although a stubborn majority within the Republican House minority implored its party to stick to its Reagan-era idealism by voting against the rescue package even the second time around, most GOP leaders, especially in the Senate, recognized that if their party didn’t change its rigid belief in free markets über alles, then as one put it, “Heaven help us” in November.

    Interestingly, October 1929 was the last time the market crashed as dramatically as it did on the day the Republicans first voted down their leadership’s recommendation. That event led to the end of America’s previous idealist era, one that also glorified free markets and attempted to enshrine laissez-faire economics as the end-all of U.S economic policy. What followed was an era of government intervention in the country’s economic well-being and an opportunity-expanding fiscal policy led by the civic generation of its time — the GI Generation. That generation supported policies that cut the share of the nation’s wealth held by its richest one percent from 50% on the day of the crash to 30% in 1949. Today’s civic generation, Millennials, are equally determined to reduce the level of economic inequality in America, which was approaching pre-depression levels before the market dived and investment houses disappeared from the landscape of Wall Street.

    Economic jingoists like Lou Dobbs may celebrate the humbling of the nation’s financial elites, but anger and resentment don’t make good economic policy. Instead, Americans will have to learn to behave like Millennials: finding win-win solutions that work for the whole group. The Millennial generation will create a new paradigm of governmental policy with guidelines for behavior established at the national level, but with implementation left to each individual or local community interacting with others in their peer-to-peer networks to make a choice on how best to comply with those national rules.

    This will create a “patient-centered healthcare system” analogous to the Millennial Generation’s fondness for user generated content on social networking sites like YouTube. America’s educational system will be refashioned with schools run as much by kids and their parents as it is by administrators. Just as Barack Obama’s acceptance speech called for individuals to make their homes more energy efficient and for executives to do the same with the companies they lead, energy and environmental policy in a Millennial era will be linked through policies that provide tax incentives along with moral persuasion from the bully pulpit of the presidency to ensure America finally ends its dependence on foreign oil. America’s role in the world will be to lead other nations in the way Millennials expect leaders to behave: finding consensus for a course of action that gains its power from the unity of the group, not the raw strength of the biggest kid on the block.

    This will require the country to make all types of productive investments. As we enter the Millennial era, America will experience changes as sweeping as any the country witnessed in the 1930s and 40s. If the past is any indication of the future, the Millennial Generation will provide the same level of leadership as America’s greatest generation did nearly eight decades ago. In the process the Millennials will put an end to the Boomer era’s destructive clashes of irreconcilable ideologies.

    Morley Winograd and Michael D. Hais are co-authors of Millennial Makeover: MySpace, YouTube, and the Future of American Politics published in 2008 by Rutgers University Press