New Geography

Category: Economics

  • Baseball Vs Basemall: Goodbye to the Games of Summer

    Even if the best-seller Fifty Shades of Grey did draw more fans than the Olympics (both sports involve “play parties” and metallic neckwear), the nominal American summer game is baseball. But that celebration of agrarian mythology and fields of dreams has descended to the level of a cable infomercial: white noise blended with car sales promotions, insurance deals, and breakfast cereals.

    As conceived and refined on nineteenth century sandlots, baseball was the symbol of the settled frontier, rules and regulations brought to a chaotic landscape populated with prehistoric giants (the Babe, Cobb, Teddy Ballgame, etc.). Now, in the twenty-first, it’s a video billboard; a familiar backdrop of sights and sounds orchestrated with the idea of selling something. The scores are incidental. The game has been lost to the vendors, and players are best understood less as pitchers, more as pitchmen.

    Fans used to watch baseball in a kind of meditative silent reflection, trying to put themselves into the mindsets of the manager or the players. Now they go to games as cash cows, to be milked in corporate barns.

    I came to these conclusions while sitting behind third base with my father at an AA minor league game between the Altoona Curve (a Pittsburgh Pirates franchise) and the Trenton Thunder (of the New York Yankees). The Curve were ahead 4-0, but the Thunder had the bases loaded and one of their sluggers, the larger-than-life Luke Murton, was at bat. The count was full, and this was the chance for Trenton to make the game close. A double would clear the bases.

    At such a moment of high drama, I expected from the fans either wild cheering for Luke or silent tension, as the pitcher looked in for the payoff pitch. Instead, Waterfront Stadium never skipped a beat of its consumerism.

    From the sound speakers around the stadium came the familiar game Muzak, a medley of charge bugles and recycled Top 40 hits. Around the stands fans stood in small clusters, holding beers, eating and chatting, as if at a barbecue. Luke’s at-bat felt little different from the transient images in a sports bar—something that you glance at while getting something to drink. No wonder Mighty Luke struck out. He was a footnote to the occasion.

    The reason that baseball is now little more than mall television has to do with the national passion for oligopoly. When the game was a sport, freely conceived and played across the country, every village, town, and city had a local team, and above them were the professional leagues. Stadiums were fields or parks, in the best sense of the words. Crowds watched the game from folding chairs, cheap bleachers, or grassy hillsides. There was an endless nationwide demand and supply for baseball, the American pastime.

    The problem with grassroots baseball, at least to the owners, was that there was too much supply of the product. Who needed to drive seventy miles to watch a dreadful team play in Kansas City, when Topeka had a good local team, with a few recognized stars and lots of bunting, sliding, and inside-the-park home runs.

    Beginning with the grant to professional baseball of an anti-trust exemption in the 1920s, the inside pitch of the owners has been to restrict the game to a handful of large American cities. Baseball as a club sport among towns and smaller cities has been snuffed out.

    Once baseball was in the hands of monopolists, players were no longer in it for the love of the game, and the winners were those who could dictate the prices of stadium box seats, cable subscriptions, and jersey sales. Think of Major League Baseball as a medieval guild, with the trade devoted to squeezing the fans on the rack.

    Because baseball became such a scarce commodity (doled out and protected by the commissioner, according to congressional fiat), team owners could threaten to move teams away from their home cities, unless given multi-million dollar stadiums, funded by taxpayers. Who would care about this carpetbagging if other baseball teams were nearby?

    Into the modern era, municipalities from New York to Altoona meekly complied with these ransom notes, and in the process have run up billions in debts and subsidies for a nominally privately-owned business that only provides jobs for ushers and shortstops.

    No edifice better illustrates the folly of baseball economics than the “new” Yankee Stadium, built adjacent to the old one for about $1.5 billion. The new one is a field of corporate and political schemes—for contractors, sky-box lessors, local politicos, season-ticket holders, and concessionaires. For fans interested just in watching a baseball game, the old and new stadiums are a wash.

    Although I am a Yankees fan, I find the new stadium to be a cross between former owner George Steinbrenner’s mausoleum and the sporting equivalent of Nuremberg’s rally fields. Pretentious columns of light now illuminate the façade, and around the interior are kitsch photographs of Yankee greats. The new stadium’s success can be measured in that it can cost a family of four $600 (parking is extra) to take in a game.

    Even at Yankee Stadium, the actual baseball game feels like a sideshow. There are giant video screens on the scoreboard, MTV commercials everywhere, the lure of $9 beer, and vast souvenir emporiums. No wonder fans at baseball games wander the stadiums as if they were at the mall.

    Another example of baseball’s descent into the service of online catalogues and corporate sponsorship can be seen, on a sports channel near you, in Williamsport, PA at the Little League World Series.

    Little Leaguers used to look like the kids playing baseball in the street, who would jump for joy when they scored a winning run and wear odd-fitting uniforms that they had snatched from their brothers’ closets.

    Now Little League is a Major League Baseball clone, and its World Series is a tournament of Mini-Me-isms. Batters stride grimly to the plate wearing hundreds of dollars of endorsed gear, from elbow pads and batting gloves to expensive helmets and space-age metal bats. Nearby are the disapproving scowls of enraged coaches and reproving parents. Whatever the score, joy has struck out.

    Contrast the morose business of Little League—chasing the same television revenue as the Red Sox and Dodgers—with the decline and fall of sandlot baseball, the felicitous schoolyard game that gave us the national pastime.

    In my travels around America, usually by car but often by train and bike, I despair at the absence of boys and girls playing informal baseball on local fields. Most baseball diamonds around the United States are as idle as Ohio steel mills. On Long Island, I recently passed dozens of fields with weeds growing up in the infield. Never once did I see kids choosing up sides or shagging fly balls.

    One reason so few American kids play baseball, I am sure, is because they associate it with the rigid hierarchy of parent-trapped Little League, not the pick-up games of summer I knew as a child. Those games began in the afternoon and only ended at darkness, when mothers rang the dinner bell, or we lost the ball in the woods.

    During the course of a pickup game, everyone got to pitch, catch, switch-hit, bunt, and field. Winning mattered less than playing hard and sliding across home plate. Nor were there coaches, parents, television announcers, sponsors, beer commercials, or umpires. As I recall those eternal games of summer, the only spectators were the fireflies that showed up at dusk.

    Flickr photo by LA Wad, ‘Giant Coke Bottle and Baseball Glove’, AT&T Park, San Francisco.

    Matthew Stevenson, a contributing editor of Harper’s Magazine, is the author of Remembering the Twentieth Century Limited, a collection of historical travel essays. His next book is Whistle-Stopping America.

  • Here’s Why People Don’t Think We’re in a Recovery

    The most recent jobs report was again below consensus.  With fewer than 100,000 new jobs, unemployment fell only because people continue to leave the labor force in huge numbers.  People are discouraged, and many don’t believe we are in a recovery.  Why would they think that we aren’t in a recovery?  After all, GDP is above its pre-recession high, and we hear all the time about how many jobs have been created over the past couple of years.

    People think we’re still in a recession because fewer of them have jobs than prior to the recession.  Below is a chart showing total non-farm U.S. jobs since 2000.  Today, we have millions fewer working than we did in 2007:

    People think that we are in a recession because they are poorer than they were prior to the recession.  As the following chart shows, Americans’ wealth is down a lot.  The average American’s wealth is down $39,000 or about 16 percent from its pre-recession high in 2005 dollars.  That is on average every man, woman, and child is $39,000 poorer than they were at the beginning of the recession.  An average family of four is $156,000 poorer than it was just a few years ago.

    Not only are Americans poorer than they were at the beginning of the recession, their income is down too.  Real (inflation adjusted) GDP may be climbing, but all of those gains are a result of increased population.  Real-per-capita GDP (the source of income) is still down more than $1,000 in 2005 dollars.

    Americans are poorer than they were, and their income is lower, and they are out of work or they know someone who is out of work.  Of course they don’t believe we are in a recovery.  The real question is that why, when things are this bad, does the chattering class spend its time debating trivial topics, such as which of the presidential candidates mistreats dogs the most?

    I think the answer is that the chattering class isn’t out of work, and they don’t know anyone who is out of work.  Maybe they know a banker who lost her job, but being a banker, she was probably evil.  So, no worries.

    This recession has hit sectors like construction and manufacturing disproportionally hard, and people who work in these sectors are not well represented in the chattering class.  Small businesses have also been badly hurt, and they too are poorly represented in the chattering class. 

    Other sectors have been hurt far less.  Education, healthcare, government, and professional services have each faced challenges, but these sectors’ job losses have been small compared to the most hard-hit sectors.

    One result of the different patterns of job losses across sectors is that we’ve seen an increase in income inequality.  Even worse, the increased inequality may be accompanied by declining upward mobility.  Income inequality without upward mobility is prescription for social trouble and slower economic growth.  Calls for income redistribution are only the beginning.

    Huge numbers of young people have failed to find jobs.  Many are living with their parents at ages far beyond what was normal just a few years ago.  Unemployed and disillusioned young people are another prescription for social trouble.

    What are our leaders doing?  Not much.  Congress is gridlocked and the President is campaigning.  The republicans call for tax cuts and spending cuts.  The democrats call for increased spending and tax increases.  Neither plan will work.

    The FED is trying to help.  It has instituted QE3, promising to purchase $40 billion in mortgage backed securities every month until economic conditions improve, whatever that means.  This will not do anything.  The FED has run out of bullets.  Policy now is all about convincing themselves and everyone else that they are doing something.

    Our deficit is huge.  It’s so large that if we were to cut all defense spending and cut all social security spending, we would just about eliminate the deficit.  But at what a cost!  We’d get rid of every soldier, gun, ship, and airplane.  We’d cut Granny off from her monthly check.

    We’re not going to do that.  We’re not going to cut the budget enough to get rid of the deficit.  So, give it up.  Budget battles on this scale are disastrous for democracies.  Best not to do it.

    Government spending is a problem.  That’s for sure, but you can’t fix it by cutting the spending.  That sounds wrong, I know, but the dynamics of democracy won’t let it work.

    Tax policy won’t do it either.  You can’t tax yourself to prosperity, and cutting taxes won’t help without a whole slew of complementary policies.  Increased spending won’t help.  The problem is that government is already too big relative to the economy. 

    Government at all levels is now about 37 percent of the economy.  This is higher than it was during World War Two.  It needs to become smaller as a percentage of the economy, but not by cutting.

    What we have to do is cap government spending on a real-per-capita basis.  We just keep spending what we’re spending per person, even after adjustment for inflation.  That way, there are no losers.  It should be relatively easy to gain support for a simple cap.

    Then, you grow your economy.  How to do that is another big topic.  But, we know the outlines:  Increase immigration.  Evaluate regulations for efficiency and economic impact.  Restructure the tax code to maintain productive incentives.  Restructure the safety net to improve incentives.  Restore incentives to education.  Remove barriers to trade.

    That is a big task, but it is a lot easier than cutting the budget as much as would be required.  It’s also a lot easier than suffering through a decade of anemic growth.  The benefits would be big too.  We’d be setting the stage for persistent prosperity.

    Bill Watkins is a professor at California Lutheran University and runs the Center for Economic Research and Forecasting, which can be found at clucerf.org.

    Unemployment photo by BigStockPhoto.com.

  • The End of the Road for Eds and Meds

    In the last few decades, as suburbanization and deindustrialization devastated so many cities, they turned to two sectors that seemed not only immune to decline, but were actually growing: universities and hospitals. The so-called “eds and meds” sectors, often related through university affiliated hospitals, became a great stabilizer for many places. For example, the fabled Cleveland Clinic cushioned the blow of manufacturing decline in that city.  Après steel, a city like Pittsburgh practically saw themselves as defined by an eds and meds economy, with the new economic pillars being the University of Pittsburgh Medical Center and Carnegie-Mellon University.

    Perhaps unsurprisingly, these sectors have come to dominate so many cites’ economic development strategies. It’s harder to find a major city that isn’t touting some variation of a life sciences “cluster” as a strategic industry than one who is, and local medical schools and hospital complexes feature prominently in this. Similarly, technology transfer from schools is supposed to power startups, while in many cities growth in the number of students itself is supposed to be an engine of growth. For example, there are 65,000 students in the so-called “Loop U” collection of colleges in downtown Chicago, and education growth has been a bulwark of the Loop economy.

    Yet in reality, overreliance on eds and meds is problematic. Firstly, these tend to be non-profit, and thus reduce the tax base in cities that are dependent on them. In danger of bankruptcy, Providence, Rhode Island was forced to ask for special contributions from Brown University and RISD, for example. Also, as quasi-public sector type entities, eds and meds are seldom a source to dynamism in communities in and of themselves.  Indeed, universities are among the most conservative of institutions in many respects.  Witness the firing and re-hiring of University of Virginia president Teresa Sullivan, for example, or faculty protests against the appointment of Indiana Governor Mitch Daniels as Purdue University’s next president due to his lack of an academic background.

    But for cities hanging their hat on eds and meds growth, a more fundamental problem now looms: these industries are at the end of their growth cycle. Spending on healthcare and college tuition costs has been skyrocketing at rates greater than inflation for years.  Here’s a chart, via Atlantic Cities, showing job creation by sector since 1939:

     

    If eds and meds employment has been going up continuously since 1939, what’s the problem?  None, so long as it started from a low base at a time when other productive sectors of the economy were likewise growing strongly. But as sectors like manufacturing went into decline or stagnated, eds and meds has continued to increase relentlessly, accounting for an ever larger  portion of total growth.  For example, between 1990 and 2008, eds, meds, and government accounted for about 50% of all national job growth.

    Unsurprisingly, with growth in jobs exploding, costs have followed. Medical costs and tuition have been growing at twice the rate of inflation, and at an increasingly divergent rate, as this chart from Carpe Diem shows:

    Clearly, such a trend cannot go on indefinitely. As the US starts to groan under the weight of spending on health care and higher education, it’s clear that, as a society, we need to be spend less, not more on these items as a share of national output.  Some cities with unique strengths, like Boston, with its many specialized biotech firms, or Houston, with the world’s largest medical center, may thrive in this environment, but the vast majority of cities are likely to be very disappointed in where eds and meds growth will take them.

    The problem with health care is most obvious. Aggregate spending on health care has been exceeding the inflation rate for many years. According to a report by McKinsey, spending on health care has consistently grown faster than GDP:

     

    The net result is a sector that has been consuming an increasing portion of the national economy.  Health care spending is projected to consume fully 20% of the entire US economy by 2021.

    The health care reform act will do little to nothing to rein in this cost. It’s difficult to see how in fact the trend will slow. But with the federal government (especially through Medicare) accounting for more and more total health care coverage, $16 trillion in national debt, and large deficits and unfunded entitlements, one can safely assume that whatever can’t go on forever, won’t. Eventually the government will be forced to take action to stabilize health care spending.

    If the health care cost crisis has long been known, the public is just waking up to the crisis in higher education costs.  Skyrocketing tuition has driven the cost of many colleges through the roof.  This traditionally didn’t bother students, who were assured that a college education the key to a good job that would easily allow loans to be repaid.  In a global age where even knowledge economy jobs are subject to offshore competition, and a recession that’s kept many young people — including many now deeply in debt — unemployed or underemployed.  There is now about $1 trillion of it outstanding, much of it non-dischargeable in bankruptcy:




    This student loan spike was created by many of the same dubious forces that led to the housing crisis. Indeed, some have said that student loans are the next subprime crisis, and commentators like Glenn Reynolds talk of a higher education “bubble”.

    The overall economy will come back at some point, but it’s clear that America is reaching the point at which it can no longer pile more debt onto the backs of students. This by itself will serve to moderate tuition increases at most institutions. There is also a significant amount of reform the current system obviously needs that, if implemented, would also tend to moderate tuition increases.  For example, it doesn’t seem unreasonable to suggest that colleges ought to have some skin in the game for these loans being repaid. Or that cheaper online education might substitute for physical classrooms in some cases.

    Regardless of how it plays out, when you look at spending in aggregate in America, it’s clear increases in health care and higher education spending cannot keep increasing at current rates.  This means that it just isn’t possible for all the cities out there dreaming of eds and meds glory to realize their dream. America simply can’t afford it.

    Whether the end of the great growth phase in eds and meds comes 1, 5, or 10 years from now can’t be predicted. But come in the reasonably near future it will, and that’s when the bulk of the cities that put all their chips in those baskets will receive a very rude awakening.

    Aaron M. Renn is an independent writer on urban affairs and the creator of Telestrian, a data analysis and mapping tool. He writes at The Urbanophile, where this piece originally appeared.

    Hospital photo by Bigstock.

  • The State of Economy in the Swing States

    I was living in Pennsylvania, voting in my second presidential election when my mom asked me that question in the months leading up to Ronald Reagan’s defeat of Jimmy Carter: “Are you better off today than you were four years ago?” Four-year-ago comparisons are tricky when the worst financial collapse in my lifetime occurred four years ago. Comparing the swing states not to their conditions four years ago, but how they might feel compared to the rest of the nation, Virginia, Colorado and New Hampshire appear to be “better off” than the average American. But in North Carolina, Florida and Pennsylvania, prices for the basic necessities are above the national average while median incomes are lagging. If consumer confidence translates into voter confidence, then the elections in some of the key swing states will belong to the Republicans in 2012.

    Conditions as Percent of National Averages

    Contested State

    Dozen Eggs

    Gasoline

    Utilities

    Income

    Unemployment

    NC

    110%

    100%

    100%

    85%

    116%

    FL

    114%

    101%

    126%

    85%

    106%

    PA

    117%

    101%

    97%

    98%

    95%

    CO

    103%

    97%

    84%

    118%

    100%

    NV

    90%

    104%

    54%

    105%

    145%

    VA

    101%

    99%

    96%

    121%

    71%

    NH

    78%

    95%

    87%

    131%

    65%

    OH

    78%

    97%

    126%

    92%

    87%

    WI

    69%

    108%

    89%

    101%

    88%

    IA

    61%

    80%

    94%

    100%

    64%

    Prices for eggs, gasoline and utilities from www.numbeo.com. Unemployment rates from www.bea.gov. Median income from www.census.gov. Percent of national average calculated by author.  Contested states from www.brookings.edu.

    A presidential election year may be a bumper season for political professionals, but it’s also a time of worry for voters. In the months leading up to the 2000 election, we were wondering how long we could ride the upside of prosperity while the Federal Reserve was busy raising interest rates designed to keep inflation in check. Eighteen months before the 2004 election, tax cuts were battling with the cost of the Iraq war in the federal budget, unemployment was up and consumer confidence was at a 10-year low with stocks headed for their third straight annual decline. A Republican – in fact the same Republican – became president both times.

    Eighteen months before the 2008 election, the overall economy was very mixed according to a Federal Reserve Board report based on data collected from their twelve district banks. Economic activity through the summer was slowing down in five regions, while the other seven reported relatively steady – though not really growing – economic activity. That summer, with the election looming, most people were worried about inflation.

    Discussions of labor shortages showed up in the Federal Reserve reports before the 2008 election from some of the swing states –  states with a large number of unaffiliated voters-like Ohio (shortages in truck drivers), Wisconsin and Iowa (shortages in skilled manufacturing workers and engineers). Pennsylvania reported tight labor markets for both skilled and unskilled workers, suggesting that wages would rise in 2009 while prices were expected to hold steady – a sure way for consumers to feel prosperous. The onset of the financial crisis in September turned all that into a fantasy.

    The party that controlled the White House during the collapse got the blame – Democrats retained the control over the House of Representatives that they won in 2006, no incumbent Democratic senators lost their seats and a Democrat was elected to the White House in 2008. In the 2010 mid-term elections, Democrats retained control over the Senate despite the largest gains by the Republican Party since 1994, yet lost their majority in the House of Representatives. The House has constitutional responsibility for federal spending; a federal budget has not passed on time (meaning there were no threatened shut-downs of the federal government) since 2007. Neither Democrats nor Republicans in the House are doing the job we pay them for – hence, their current new-record-low well-deserved 12% approval.

    This time around, Wall Street has all of the Washington Democrats cheering for a rally. New Geography reader NellyHills put it succinctly (08/26/2012 comment on The Next Public Debt Crisis Has Arrived): “Unfortunately at this point we have 2 choices which are both bad: Continue to believe live with the inflation…, or, Pop the bubble and all suffer through a 10 to 20 year depression. Either way, the middle class loses.” Regular New Geograpphy readers know that having a choice of candidates does not always mean having a good choice. But presidential elections are not won at the national level – they are won in the states, thanks to the Electoral College process of assigning votes. Jobs are a subject every voter understands: Either you have one or you don’t. Again, some of the swing states are really not feeling it while a few – notably Iowa, New Hampshire and Virginia – are doing better than the rest of the nation.

    Contested State

    Unemployment as percent of national rate

    NV

    145%

    NC

    116%

    FL

    106%

    CO

    100%

    PA

    95%

    WI

    88%

    OH

    87%

    VA

    71%

    NH

    65%

    IA

    64%

    Unemployment rates from www.bea.gov. Percent of national average calculated by author.  Contested states from www.brookings.edu.

    Reviewing more recent Federal Reserve Board reports, it is clear that the uncertainty about U.S. fiscal policy and weak demand from consumers are being blamed for the conservative approach to hiring by most employers.

    District

    Contested States

    Jobs

    Wages

    Atlanta

    FL

    Flat to up slightly except in discount retailers where hiring is up significantly

    Positive growth, especially for highly skilled*

    Boston

    NH

    Mostly flat, but without layoffs

    (No comment provided)

    Chicago

    IA, WI

    Flat to up slightly

    Flat except for highly skilled*

    Cleveland

    OH + Pgh PA

    Little hiring except highly skilled

    Flat

    Philadelphia

    PA Ex Pgh

    Up slightly

    Steady to falling

    Kansas City

    CO

    Flat

    Flat except for highly skilled*

    Richmond

    VA, NC

    Temp-to-permanent transitions rising though demand for labor continues to weaken except in highly skilled

    Some widespread gains in wages.

    San Francisco

    NV

    High unemployment and tepid hiring except in highly skilled

    Limited upward pressure (mainly from cost of benefits)

    *Highly skilled workers include information technology, health care, transportation and some profession services, plus certain manufacturing jobs. Source: Federal Reserve Board Beige Book, July 2012

    Once voters have a source of income, the next concern has to be prices — Reagan’s exact words were “Is it easier for you to go and buy things in the store?” Despite lower input prices, consumer product prices are creeping higher across most of the nation.

    District

    Contested States

    Input Prices

    Consumer Prices

    Atlanta

    FL

    Lower energy prices, slightly higher input prices with expectation of future decline

    Higher (based on increased sales in discount stores).

    Boston

    NH

    Steady, but sluggish production

    Steady to slightly higher

    Chicago

    IA, WI

    Lower energy prices, lower retail and wholesale prices for cotton, lower steel and scrap metal prices.

    Food prices expected to rise as crop production deteriorates. Weak response to “sale” promotions.

    Cleveland

    OH + Pgh PA

    Steel and scrap metal price rises easing, some off-shore labor costs rising

    Steady

    Kansas City

    CO

    Steel and scrap metal price rises easing, increases in the cost of building supply materials

    Steady

    Philadelphia

    PA Ex Pgh

    Increases in the cost of building supply materials; otherwise, falling prices.

    Generally falling price levels. Limited ability to pass price increases to homebuyers.

    Richmond

    VA, NC

    Lower prices for cotton to retailers and manufacturers, increases in the cost of building supply materials

    Price increases passed on to homebuyers

    San Francisco

    NV

    Declining prices for raw materials and energy

    Upward pressure easing somewhat

    Source: Federal Reserve Board Beige Book, July 2012

    Back in 2000, Alan Greenspan’s Federal Reserve raised interest rates one time too many, Al Gore won the popular vote, George Bush became president and by March of 2001 we were in recession. In 2008, Bernanke considered making changes to the Fed’s policy to stop all the guessing and swooning that the markets do over Federal Reserve interest-rate changes by making a target known. Credit markets froze solid, Wall Street got bailed out in September, Barack Obama was elected in November. The Wall Street Reform Act passed in 2009 has yet to be enacted in any significant way. Changes in monetary policy – along with double-dip recessions and other economic problems overseas – have so far offset any predicted decline in the dollar that would result in measurable inflation. But that doesn’t matter if you are in Pennsylvania, Florida or North Carolina and struggling to put a roof over your head and food on the table.

    Susanne Trimbath, Ph.D. is CEO and Chief Economist of STP Advisory Services. Dr. Trimbath’s credits include appearances on national television and radio programs and the Emmy® Award nominated Bloomberg report Phantom Shares. She appears in four documentaries on the financial crisis, including Stock Shock: the Rise of Sirius XM and Collapse of Wall Street Ethics and the newly released Wall Street Conspiracy. Dr. Trimbath was formerly Senior Research Economist at the Milken Institute. She served as Senior Advisor on United States Agency for International Development capital markets projects in Russia, Romania and Ukraine. Dr. Trimbath teaches graduate and undergraduate finance and economics.

    States map image by Bigstock.

  • The Growing Number of Freelancers in Entertainment

    When people were preparing eulogies for the entertainment sector, Techdirt’s Mike Masnick popped out with his bold piece, “The Sky is Rising,” and poked holes in the gloomy forecast. His scrutiny of the numbers revealed that the entertainment industry is actually growing. Entertainment consumption per household increased from 2000 to 2008. Employment in the entertainment sector jumped 20% from 1998 to 2008. And the number of independent artists rose 43% over the same period.

    While the outlook for the sector might not be quite as sunny as Masnick indicates in his report (case in point: the share of household income spent on entertainment has declined every year since 2008), it’s true that entertainment employment is on the rise. Over the last decade-plus, the number of entertainment and sports-related jobs — a group of 10 occupations that includes actors, musicians, and dancers, as well as coaches and referees, etc. — has grown 30%.

    But much of this job growth, especially since the recession, is not of the traditional wage-and-salary variety. Instead, EMSI’s new class-of-worker data shows that proprietors account for 242,000-plus, or nearly 80%, of the jobs added since 2001 in the main entertainment and sports-related occupations. This includes workers whose main income comes from self-employment, and even more so those doing side gigs in addition to their day job (what EMSI labels as “extended proprietors” but might better be referred to as freelancers in this case).

    Note: EMSI’s employment estimates are a count of jobs, not a count of workers. One person can hold more than one job, and this is particularly the case with the types of worker activity tracked in our extended proprietor dataset.

    ENTERTAINMENT-RELATED JOBS (2001-2012)
    Source: EMSI 2012.2 Class of Worker
    2001 Jobs 2008 Jobs 2012 Jobs % Growth Since 2001 % Growth Since 2008 Avg. Hourly Wage
    Wage-and-Salary 492,960 549,333 556,765 13% 1% $19.32
    Self-Employed & Extended Proprietors 512,383 685,773 755,137 47% 10% $17.24
    Total 1,005,343 1,235,106 1,311,902 30% 6% $18.15

     

    Since 2001, employment in entertainment and sports among wage-and-salary workers (those who draw benefits and pay into the unemployment insurance program) has increased 13%. This is a solid gain, but consider that since ’08, the heart of the recession, the job gains have been minimal (1% growth, or 7,432 jobs added).

    But look at the self-employed and extended proprietors row in the above table: this part of the entertainment and sports-related workforce has mushroomed 47% since ’01, and 10% since ’08.

    The growth in proprietors makes sense when you think about the work being done in these fields — moms and dads coaching their kids (or serving as referees) in soccer, office workers moonlighting in a band that does local gigs, men and women working part-time for the local stage company as an actor or director. These are just a few examples. But it’s clear businesses that hire these types of workers require or prefer freelancers or part-timers; it’s just the nature of the work. And as families’ budgets get tighter or single people need extra (or any) income, these jobs are a welcomed option, at least in the short term.

    There are still more than a half million salaried jobs in these fields. But increasingly, freelance workers are becoming the norm in entertainment and sports.

    The Workforce Breakdown

    Overall, 58% of the “entertainers and performers, sports and related” workforce, as it’s classified by the Bureau of Labor Statistics, is made up of proprietors. That’s up from 51% in 2001 and 56% in 2008.

    The largest occupation in this sector, musicians & singers, is predominantly composed of those who do work on the side. Just over 265,000 of 440,000-plus musician jobs in the US fall under EMSI’s extended proprietor category, and there are nearly as many self-employed musicians (73,875) as traditional W-2 musicians (102,628).

    Musicians aren’t alone in this trend, of course. Of the 118,000-plus estimated actors in the US, almost half are extended proprietors and another 18,520 are self-employed. Dancers, coaches & scouts, and others have a similar labor force breakdown.

    The highest percentage growth since 2001 among these 10 occupations has come in coaches and scouts (51%). Second is actors at 42%; of the 34,706 new actors jobs in the last decade-plus, all but 2,230 have come in the self-employed and extended proprietor categories.

    SOC Code Description 2001 Jobs 2012 Jobs Change % Change Median Hourly Wage Education Level
    Source: EMSI 2012.2 Class of Worker – QCEW Employees, Non-QCEW Employees, Self-Employed, Extended Proprietors
    27-2011 Actors 83,451 118,157 34,706 42% $16.54 Long-term on-the-job training
    27-2012 Producers and Directors 126,576 124,670 -1,906 -2% $28.86 Bachelor’s or higher degree, plus work experience
    27-2021 Athletes and Sports Competitors 28,335 38,520 10,185 36% $27.30 Long-term on-the-job training
    27-2022 Coaches and Scouts 198,681 299,509 100,828 51% $13.89 Long-term on-the-job training
    27-2023 Umpires, Referees, and Other Sports Officials 25,547 34,447 8,900 35% $11.31 Long-term on-the-job training
    27-2031 Dancers 29,914 37,496 7,582 25% $14.70 Long-term on-the-job training
    27-2032 Choreographers 17,343 22,628 5,285 30% $18.30 Work experience in a related occupation
    27-2041 Music Directors and Composers 65,593 79,927 14,334 22% $19.31 Bachelor’s or higher degree, plus work experience
    27-2042 Musicians and Singers 324,934 441,882 116,948 36% $18.01 Long-term on-the-job training
    27-2099 Entertainers and Performers, Sports and Related Workers, All Other 104,970 114,665 9,695 9% $18.47 Long-term on-the-job training
    Total 1,005,343 1,311,902 306,559 30% $18.15

     

    Across the board, the job growth numbers look radically different if we take out proprietors. Looking just at EMSI’s QCEW dataset, which corresponds to published Quarterly Census of Employment and Wages data, only four of these occupations have had double-digit growth since ’01: coaches and scouts (39%); choreographers (32%); entertainers and performers, sports and related workers, all other (15%); and music directors and composers (13%).

    Top Metros for Entertainment

    We all know New York City and Los Angeles are major entertainment hubs. But EMSI’s data is still startling: The nation’s two largest cities account for nearly 1 out of every 5 entertainment and sports-related jobs in America. The New York City metro area has the most jobs in entertainment and sports-related fields of any MSA (with more than 116,000 estimated in 2012), followed by L.A. (112,528). These two have nearly four times the number of jobs as Chicago, which has the third-most in the US at nearly 37,000.

    Of the 50 most populous metros in the U.S., Los Angeles is also the most concentrated in entertainment and sports-related workers. With a location quotient of 2.06, L.A. is more than twice as concentrated as the national average of 1.0. Nashville, with an LQ of 2.02, is close behind, followed by San Francisco, New York, Las Vegas, and Austin, Texas.

    Since 2008, Austin has blown away every other big metro in terms of its job growth in entertainment and sports jobs (18.4%). Second is Richmond, VA (13.4%).

    ENTERTAINMENT-RELATED JOBS IN 50 LARGEST METRO AREAS
    Source: EMSI 2012.2
    MSA Name 2012 Jobs 2008-2012 Percentage Growth Median Hourly Earnings 2012 National Location Quotient
    Los Angeles-Long Beach-Santa Ana, CA 112,528 1.3% $26.22 2.06
    Nashville-Davidson–Murfreesboro–Franklin, TN 15,442 7.8% $22.12 2.02
    San Francisco-Oakland-Fremont, CA 30,667 5.6% $23.80 1.51
    New York-Northern New Jersey-Long Island, NY-NJ-PA 116,234 7.9% $23.81 1.43
    Las Vegas-Paradise, NV 10,242 5.0% $21.14 1.29
    Austin-Round Rock-San Marcos, TX 10,421 18.4% $16.51 1.27
    Orlando-Kissimmee-Sanford, FL 11,380 5.4% $17.42 1.22
    Portland-Vancouver-Hillsboro, OR-WA 11,953 6.2% $16.01 1.21
    Salt Lake City, UT 7,480 9.1% $18.46 1.20
    Boston-Cambridge-Quincy, MA-NH 26,143 5.1% $20.53 1.14
    New Orleans-Metairie-Kenner, LA 5,906 6.5% $15.85 1.13
    Seattle-Tacoma-Bellevue, WA 18,608 6.1% $19.06 1.13
    Minneapolis-St. Paul-Bloomington, MN-WI 17,912 4.0% $18.94 1.11
    Atlanta-Sandy Springs-Marietta, GA 24,329 12.9% $19.39 1.06
    Washington-Arlington-Alexandria, DC-VA-MD-WV 30,413 7.5% $19.64 1.06
    Milwaukee-Waukesha-West Allis, WI 7,385 -0.2% $16.21 1.05
    Denver-Aurora-Broomfield, CO 12,975 0.4% $18.08 1.04
    Hartford-West Hartford-East Hartford, CT 5,842 8.5% $19.33 1.02
    Indianapolis-Carmel, IN 8,184 11.3% $16.60 1.02
    Kansas City, MO-KS 9,226 10.7% $16.17 1.01
    Providence-New Bedford-Fall River, RI-MA 6,235 3.0% $16.47 1.00
    Raleigh-Cary, NC 4,897 8.7% $15.55 1.00
    Birmingham-Hoover, AL 4,713 5.6% $14.64 0.99
    Dallas-Fort Worth-Arlington, TX 28,900 13.2% $18.42 0.96
    Richmond, VA 5,363 13.4% $15.50 0.95
    Tampa-St. Petersburg-Clearwater, FL 10,409 9.5% $17.60 0.95
    St. Louis, MO-IL 11,182 2.7% $18.81 0.94
    Cleveland-Elyria-Mentor, OH 8,465 4.4% $14.95 0.93
    Sacramento–Arden-Arcade–Roseville, CA 7,844 1.2% $17.26 0.93
    San Diego-Carlsbad-San Marcos, CA 12,478 1.4% $21.90 0.93
    San Jose-Sunnyvale-Santa Clara, CA 7,991 8.2% $19.51 0.92
    Baltimore-Towson, MD 11,283 2.7% $18.28 0.91
    Jacksonville, FL 5,305 12.2% $17.98 0.91
    Charlotte-Gastonia-Rock Hill, NC-SC 7,130 5.4% $18.80 0.90
    Chicago-Joliet-Naperville, IL-IN-WI 35,828 4.8% $16.91 0.89
    Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 21,974 7.3% $18.29 0.89
    Cincinnati-Middletown, OH-KY-IN 8,041 5.8% $17.61 0.88
    Columbus, OH 7,586 8.0% $16.84 0.88
    Miami-Fort Lauderdale-Pompano Beach, FL 20,187 5.4% $22.13 0.86
    Pittsburgh, PA 8,991 10.8% $17.61 0.86
    Louisville/Jefferson County, KY-IN 4,743 5.6% $15.98 0.85
    Detroit-Warren-Livonia, MI 13,422 0.0% $16.29 0.81
    Buffalo-Niagara Falls, NY 3,768 -0.2% $15.66 0.80
    Memphis, TN-MS-AR 4,531 7.0% $16.74 0.80
    Oklahoma City, OK 4,534 11.9% $15.62 0.79
    Virginia Beach-Norfolk-Newport News, VA-NC 5,814 4.8% $14.31 0.79
    Phoenix-Mesa-Glendale, AZ 13,194 6.7% $18.27 0.78
    Riverside-San Bernardino-Ontario, CA 9,203 1.6% $18.51 0.76
    San Antonio-New Braunfels, TX 6,732 11.2% $16.98 0.76
    Houston-Sugar Land-Baytown, TX 18,270 11.8% $18.87 0.69

     

    What About All MSAs?

    Among all MSAs in the US with at least 500 jobs in these fields, the highest concentration in the entertainment and sports-related sector belongs to Edwards, Colorado, which is just west of the resort community of Vail (home to the Vail Jazz Festival). The Edwards MSA has just 1,100 estimated entertainment and sports-related jobs. But with a location quotient of 8.42, it is more than eight times as concentrated as the national average in these fields.

    Next is an MSA that you’d probably expect to see this high on the list: Santa Fe, New Mexico (with an LQ of 4.01). Sante Fe is known for its art galleries, museums, and other tourist-friendly sites, and it has more than 2,000 entertainment and sports-related jobs.

    Joshua Wright is an editor at EMSI, an Idaho-based economics firm that provides data and analysis to workforce boards, economic development agencies, higher education institutions, and the private sector. He manages the EMSI blog and is a freelance journalist. Contact him here.

    Film crew photo by Bigstock.

  • Barack Obama’s New Chicago Politics Abandon Bill Clinton’s Winning Coalition

    While the Democratic convention this week celebrates the party’s new coalition, Bill Clinton will no doubt try to recapture the white middle class that’s largely deserted the Democrats since his presidency ended. But it’s likely his efforts will be a case of too little, too late for Barack Obama—who will have to look elsewhere for his electoral majority.

    The gentrification of the Democratic Party has gone too far to be reversed in this election. After decades of fighting to win over white working- and middle-class families, Democrats under Obama have set them aside in favor of a new top-bottom coalition dominated by urban professionals—notably academics and members of the media—single women, and childless couples, along with ethnic minorities.

    Rather than representing, as Chris Christie and others on the right suggest, the old, corrupt Chicago machine, Obama in fact epitomizes the city’s new political culture, as described by the University of Chicago’s Terry Nichols Clark, that greatly deemphasizes white, largely Catholic working-class voters, the self-employed, and people involved in blue-collar industries.

    The Chicago that Obama represents is more Hyde Park or the Gold Coast than the Daley family base in blue-collar Bridgeport; more faculty club, media shop or Art Institute than the factory culture of “the city of Big Shoulders”.

    The traditional machine provided him with critical backing early in his political career, but Obama owes his success to new groups that have taken center stage in the increasingly liberal post-Clinton Democratic party: the urban “creative class” made up mostly of highly-educated professionals, academics, gays, single people, and childless couples. It’s a group Clark once called “the slimmer family.” Such people were barely acknowledged and even mistreated by the old machine; now they are primary players in the “the post-materialistic” party. The only holdovers from the old coalition are ethnic minorities and government workers.

    As Clark suggests, the new political urban culture differs in both intent and content from the old one. In the past, say under Richard Daley Sr., Chicago was still a family city where schools, churches, and neighborhood associations were key local amenities. Patronage meant jobs for people who also owned homes, both inside and outside the city, and raised and educated their children, often in Catholic schools. The old Daley machine would no more take on the church on contraception than embrace North Korea as its political role model.

    The  Chicago that spawned Obama  has very different priorities. Clark gives perhaps the best definition—“the city as entertainment machine,” where citizens are preoccupied with quality-of-life issues, “treating their own urban location as if tourists, emphasizing aesthetic concerns.”

    This new city, built around the needs of largely childless and often single professionals, focuses primarily on recreation, arts, culture, and restaurants;  the resources valued by the newly liberated urban individual. The economy of such places focuses primarily on those jobs done by these professionals, either in the over-hyped social-media sector, traditional entertainment, or as service providers— waiters, toenail painters, dog-walkers—that cater to the gentry of the urban core.

    In this urban schema, family, long the basic unit of society, becomes peripheral. The new urban political  base—not only in the Windy City but in Boston, New York, Los Angeles, Seattle, Boston and other parts of the core Obama archipelago—is primarily childless, notes demographer Ali Modarres. A majority of residences in Manhattan, for example, are for singles; thus Mayor Bloomberg’s push for 300 square-foot “affordable” micro units that could cost as much as $2,000 a month. Gentrifying Washington, D.C., now boasts the highest concentration of childless adult females in the nation, a mind-boggling 70 percent of all adult women.

    With more than half of all American women now single and more than half of all births to women under 30 now occurring outside of marriage—both historic developments—Obama has targeted “single women” as a core constituency second only to African Americans. Democratic pollster Stanley Greenberg has dubbed them “the largest progressive voting bloc in the country.” Singles, though not the most reliable voting bloc, almost elected John Kerry, and helped put Obama over the top.

    The new urban political culture Nichols described in Chicago has gone national, essentially gentrifying  the Democratic Party and pushing away the predominately white working- and middle-class families whose goals centered around achieving home ownership, basic essentials, and the occasional luxury. These groups have been leaving both the core cities and the Democratic Party for generations. Bill Clinton, former governor of a poor southern state, connected with these voters through his political genius, natural empathy, and his own biography in ways that have proven difficult for President Obama.

    By all accounts, the inroads made among the group by Clinton, and, thanks to the economic crisis, Barack Obama in 2008, have largely dissipated now. Polling data suggests that these groups are now among the strongest backers of that eminent and hard-to-like patrician, Mitt Romney. 

    Recent Gallup polls show Obama’s strongest support, in terms of professions, coming from “professionals,” such as teachers, lawyers, and educators. He does worst among both small businesspeople and those who work in industries such as energy, manufacturing, transportation and construction, where Democrats from Roosevelt to Clinton often won significant support.

    The division between the new political culture and the older one can be seen in a host of issues, most notably policies that favor urban density over suburbs, and strict environmental policies that hurt basic industries. An agenda aimed at ending “sprawl,” cars, and carbon-generating industries appeals generally to the unmarried and childless, who don’t have to worry overmuch about the need for extra space, backyards, or mundane tasks like taking kids to school, or to Target.  

    Ironically, the other key component of the new political culture comes from the other end of the social order: generally poorer, urban-centered minority populations. For all the hype about gentrification of cities, over the past decade the poor accounted for about 80% of population growth in the urban cores of the nation’s 51 largest metropolitan areas. In suburban areas, by contrast, the poor accounted for just 32 percent of population growth.

    Ironically, these poor minorities continue to back the new political culture even though it favors policies, such as expensive “green energy” and tight regulations, that essentially force all but the highest value-added businesses from the urban core, leaving what Mayor Michael Bloomberg famously defined as “the luxury city.” As manufacturers and many service businesses leave either for the suburbs or less expensive regions, the historical working and middle class has also exited, leaving behind a largely entrenched poverty population, a post-materialist upper class, and little in-between.

    Focused on the “upstairs” part of the new political culture, the administration—confident in minority support—has done very little materially to improve the long-term prospects of those “downstairs.” Minorities, in fact, have done far worse under this administration than virtually any in recent history, including that of the hapless George W. Bush. In 2012, African-American unemployment stands at the highest level in decades; 12 percent of the nation’s population, blacks account for 21 percent of the nation’s jobless. The picture is particularly dire Los Angeles and Las Vegas, where black unemployment is nearly 20%, and Detroit, where’s it’s over 25 percent. 

    Latinos, the other major part of the Party’s “downstairs” coalition, have also fared badly under Obama. This is true even among the aspiring working- and middle-class. Overall, the gap in net worth of minority households compared to whites is greater today than in 2005. White households lost 16% in recent years, but African-Americans dropped 53% and Latinos a staggering 66% of their pre-crash wealth. 

    So how does the Democratic Party, in Chicago and elsewhere, maintain its support among these groups? Needlessly exclusionary Republican policies play a role, scaring off potential minority voters, particularly immigrants and their offspring. Obama also has used his own biography to appeal personally to these groups, most understandably African-Americans, as a way to divert them from his economic shortcomings. And well-timed election-year conversions on key social issues like gay marriage and amnesty for young undocumented immigrants have helped him outmaneuver the hopelessly clueless GOP.

    The fact that there are few decent middle-income jobs—in fact the jobs that have appeared during the recovery have been vastly worse than those lost during the meltdown—for the newly legalized or anyone else seems, at the moment at least, somewhat besides the point.

    Indeed  “besides the point” may be the real Democratic slogan for this year. The Democrats in Charlotte need to argue that results—fewer jobs and far fewer middle-income jobs—matter less than the blessings of green politics, urbanism, and racial-identity politics. In today’s  Democratic party, having  the “correct”  sentiments often seem to outweigh even the fundamentals of broad-based economic success.

    One can only wonder what Harry Truman would think of Obama’s approach, or perhaps even Bill Clinton in his private moments.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in The Daily Beast.

    Bill Clinton photo by Bigstock.

  • Livable China

    Recently, the McKinsey Global Institute published its report ‘The Most Dynamic Cities in 2025‘ in Foreign Policy, a highly respected US journal. On this list, 27 mainland Chinese cities as well as Hong Kong took top spots alongside Shanghai and Beijing, leaving many other world-renowned metropolises far behind.

    As a Chinese who has lived through China’s transformation over the past two decades, I was hardly surprised by the results of this report. What really shocked me was the doubt and controversy that this report generated in western media, especially the negativity in the heated discussions published in the very same issue of Foreign Policy.

    Among these, I was most taken aback by Mr. Isaac Stone Fish’s article ‘Unlivable Cities’. Having lived in several different Chinese cities over a 7-year period, Mr. Fish should be able to provide an objective prospective about China. Unfortunately, the takeaway from his article, in his own words is: ‘For all their economic success, China’s cities, with their lack of civil society, apocalyptic air pollution, snarling traffic, and suffocating state bureaucracy, are still terrible places to live.’

    First of all, when it comes to civilization, there are very few countries where civil society can be traced back 5000 years like China. Today’s China may be in some aspects less civilized compared with the more developed countries, but China has come a long way in creating a more civilized society in recent years. When the People’s Republic of China was founded in 1949, the illiteracy rate was more than 80% in China, but as of today, the illiteracy rate among Chinese born after 1980 is under 1%. In cities, 80% of students go on to post-secondary studies. These highly educated young Chinese will undoubtedly redefine China’s civilization. When it comes to parenting, the 80s generation, now mostly young parents, are studying how to be a parent, which would have been unheard of just a decade ago.

    The new Chinese parents are teaching their kids to use polite expressions like ‘thank-you’ and ‘sorry’, something generally neglected in the past. Pioneer cities like Shanghai and Guangzhou opened ‘Manner and Etiquette’ classes in most of their primary and high schools starting in 2006. Our education system is changing as well, gradually switching from being purely exam-oriented, to cultivating students with all around abilities. Our future generations will continue to bring China into a new era of civil society. It is ironic for Mr. Fish to call China ‘unlivable’ by describing China as having ‘lack of civil society’, yet in his own narration later he wrote: ‘Chinese cities have little crime, one can stroll safely through Beijing’s magnificent Temple of the Sun park at midnight’. How many of today’s ‘livable’ and ‘civilized’ North American cities can claim that?

    Air pollution is an issue in China, but no different than the smog that hung in the sky in Pittsburgh, London, or Los Angeles when those cities were going through their own vast development phases.   China is generating the greatest total greenhouse gas emissions in the world, but its greenhouse gas emission per capita in 2008 only ranks 78th of 214 countries in the world, while Australia ranks 11th, followed by USA (12th) and Canada (15th). China is manufacturing for the whole world, so in a sense it’s a scapegoat for countries that don’t want to or cannot make things for themselves. Yet even with that, air pollution in China never reaches the level described in Mr. Fish’s article. Take Nanjing (300 km northwest of Shanghai) as an example: in the one week Mr. Fish spent there, the only thing he saw was ‘smog the color of gargled milk’.

    Having lived in Nanjing for almost 10 years, I do not find Nanjing’s air quality unbearable. On the contrary, I love wondering on the streets of this ancient yet modern city, breathing the fresh air and enjoying the sweet scent given off by the Wutong Shu (Phoenix trees) erected on both sides of the streets. Every morning, citizens go outside to exercise in the mountains and parks. At night time, people take walks outside after dinner. Never would I suggest that Nanjing is an ‘unlivable’ city.


    Phoenix Trees in Nanjing

    In 2011, 14.5 million cars were sold in China. It has overtaken America as the largest automobile market. This has and will continue to cause significant traffic congestion, a worldwide issue most metropolises face today. However, China is very proactively providing solutions to this problem. In Beijing, Shanghai and Guangzhou, the local municipality limits the licenses plates issued every year in an attempt to relieve the burden caused by new traffic. Of course, China knows better than anybody that nothing will stop its citizens’ desire for car ownership as they get richer, so the only way to prevent future traffic problems is to invest in more quality highways, cleaner cars and better public transit systems.

    With China now spending approximately half a trillion dollars annually on infrastructure (9 percent of its GDP), visitors should not be surprised to see numerous highways and subways under construction in most Chinese cities. In 2010, Shanghai had the world’s most extensive subway system (429 km), followed by London (402 km) and then Beijing (372 km). By 2020, the total length of Shanghai’s subway lines will reach 877 km, more than double of New York’s current total length of subway lines. Meanwhile, China provides large subsidies to the taxi and bus industries. On top of that, with the world’s longest rail network, China’s high-speed rail system is changing the way people travel between Chinese cities. The newest bullet train from Beijing to Shanghai can bring passengers to their destination in less than five hours, while flying over the terrain at a maximum speed slightly over 300 km per hour.

    Bureaucracy has been rife in China literally for millennia, and the onset of a market economy has not changed that sad fact. Much of the criticism of China relates to censorship. Yet this is less an issue for most Chinese than for either westerners and some Chinese intellectuals. With the fast development of information science and the enormous variety of media available, people can freely choose what movie, play or art show they wish to watch, discuss anything they are interested in with their families and friends, and most importantly live the life styles they want. The ‘pervasive fear of censorship’ described by Mr. Fish literally does not exist for today’s average Chinese citizen.

    Mr. Fish also gave specific examples of ‘unlivable’ cities in China. Among them, Harbin, the capital city of Heilongjiang province, was voted the least livable metropolis mainly due to its cold winter. Personally, during my own time there, I was fascinated by Harbin’s characteristic Russian architecture, the massive and astonishingly beautiful ice sculptures, and the fun winter activities that were available. All these temperaments make Harbin an extraordinary city. I am currently studying in Canada, a country justly famous for freezing winters. Constantly hearing Canadians complain about their ‘unbearably cold’ winters makes me realize that if winter temperature is a key criteria to judge whether a city is livable or not, Winnipeg, Manitoba would probably be crowned the most unlivable city in the Western hemisphere. I can only imagine what Mr. Fish would have to say about cities like Oslo, Helsinki, Copenhagen, or Minneapolis.

    China clearly is no paradise, yet the world should recognize how significantly the quality of life has improved over the stereotypes of the past. Growing up in 40 square meter (430 square feet) ‘Dormitory Style Housing’ (as Mr. Fish put it), with my parents and grandparents, I remember vividly how our neighbors nearly burst through our door to see our newly purchased color TV, the first they had ever seen. My happiest moment was licking a popsicle to its last frozen drop in the summer heat. Considering my parents’ combined monthly salary about 20 USD in the 1980s, this popsicle was quite a treat. Two decades later, in the same summer heat, my husband and I moved into a brand new three-bedroom condo in Nanjing, fully equipped with the most modern electronic appliances. Our condo is surrounded by a beautiful pond, a gymnasium, a supermarket and a nearby subway station. We make 3400 USD a month, eat out often and travel every year. This is not atypical for most middle-class Chinese people now. The welfare system is improving, people are less worried about getting sick, a retirement fund is in place, people now travel not only domestically but also internationally, and many send their children abroad to receive higher education. Where we are now would have been unthinkable to most people only a few decades ago.

    I’m often deeply saddened by the way in which China is so often portrayed in western media. China’s growth and development over the past few decades has been vast, and it possesses potential for a more affluent future. Westerners may refer to China as ‘unlivable’ but for me, and hundreds of millions of people like me, China today is more than simply livable, and it will continue to improve as time goes by.

    Lisa Gu is a 28 year old Chinese national who lived in Nanjing, China. She is currently studying at Wilfrid Laurier University in Waterloo, ON, Canada.

    Photo by Wikicommons user shakiestone.

  • The Unseen Class War That Could Decide The Presidential Election

    Much is said about class warfare in contemporary America, and there’s justifiable anger at the impoverishment of much of the middle and working classes. The Pew Research Center recently dubbed the 2000s a “lost decade” for middle-income earners — some 85% of Americans in that category feel it’s now more difficult to maintain their standard of living than at the beginning of the millennium, according to a Pew survey.

    Blaming a disliked minority — rich business folks — has morphed into a predictable strategy for President Obama’s Democrats, stripped of incumbent success. But all the talk of “one percent” versus “the ninety nine percent” misses new splits developing within both the upper and middle classes.

    There is no true solidarity among the rich since no one is yet threatening their status. The “one percent” are splitting their bets. In 2008 President Obama received more Wall Street money than any candidate in history, and he still relies on Wall Street bundlers for his sustenance. For all his class rhetoric, miscreant Wall Streeters, particularly big ones, have evaded big sanctions and the ignominy of jail time.

    Obama enjoys great support from the financial interests that benefit from government debt and expansive public largesse. Well-connected people like Obama’s financial tsar on the GM bailout, Steven Rattner, who is also known as a vigorous defender of “too big to fail.”

    The “patrician left” — a term that might have amused Marx — extends as well to Silicon Valley, where venture capitalists and techies have opened their wallets wider than ever before for the president. Microsoft and Google are two of Obama’s top three organizational sources of campaign contributions. Valley financiers are not always as selfless as they or their admirers imagine: Many have sought to feed at the Energy Department’s bounteous “green” energy trough and all face regulatory reviews by federal agencies.

    The Republicans have turned increasingly to those patricians who depend on the more tangible economy. If you make your living from digging coal or exploring for oil wells, even if you don’t like him, Romney is you man. This saddles the GOP with the burden of being linked to one of America’s most hated interests: oil and gas companies. Almost as detested is the biggest source of Romney cash, large Wall Street banks. (In contrast, Democratic-leaning industries, such as Internet-related companies, enjoy relatively high public support.)

    With the patriarchate divided, the real action in the emerging class war is taking place further down the economic food chain. This inconvenient reality is largely ignored by the left, which finds the idea of anyone this side of Bain Capital supporting Romney as little more than “false consciousness.”

    Obama’s core middle-class support, and that of his party, comes from what might be best described as “the clerisy,” a 21st century version of France’s pre-revolution First Estate. This includes an ever-expanding class of minders — lawyers, teachers, university professors, the media and, most particularly, the relatively well paid legions of public sector workers — who inhabit Washington, academia, large non-profits and government centers across the country.

    This largely well-heeled “middle class” still adores the president, and party theoreticians see it as the Democratic Party’s new base. Gallup surveys reveal Obama does best among “professionals” such as teachers, lawyers and educators. After retirees, educators and lawyers are the two biggest sources of campaign contributions for Obama by occupation. Obama’s largest source of funds among individual organizations is the University of California, Harvard is fifth and its wannabe cousin Stanford ranks ninth.

    Like teachers, much of academia and the legal bar like expanding government since the tax spigot flows in the right direction: that is, into their mouths. Like the old clerical classes, who relied on tithes and the collection bowl, many in today’s clerisy lives somewhat high on the hog; nearly one in five federal workers earn over $100,000.

    Essentially, the clerisy has become a new, mass privileged class who live a safer, more secure life compared to those trapped in the harsher, less cosseted private economy. As California Polytechnic economist Michael Marlow points out, public sector workers enjoy greater job stability, and salary and benefits as much as 21% higher than of private sector employees doing similar work.

    On this year’s Labor Day, this is the new face of unionism. The percentage of private-sector workers in unions has dropped from 24% in 1973 to barely 7% today and in 2010, for the first time, the public sector accounted for an absolute majority of union members. “Labor” increasingly means not guys with overalls and lunch pails, but people whose paychecks are signed by taxpayers.

    The GOP, for its part, now relies on another part of the middle class, what I would call the yeomanry. In many ways they represent the contemporary version of Jeffersonian farmers or the beneficiaries of President Lincoln’s Homestead Act. They are primarily small property owners who lack the girth and connections of the clerisy but resist joining the government-dependent poor. Particularly critical are small business owners, who Gallup identifies as “the least approving” of Obama among all the major occupation groups. Barely one in three likes the present administration.

    The yeomanry diverge from the clerisy in other ways. They tend to live in the suburbs, a geography much detested by many leaders of the clerisy and, likely, the president himself. Yeomen families tend to be concentrated in those parts of the country that have more children and are more apt to seek solutions to social problems through private efforts. Philanthropy, church work and voluntarism — what you might call, appropriately enough, the Utah approach, after the state that leads in philanthropy.

    The nature of their work also differentiates the clerisy from the yeomanry. The clerisy labors largely in offices and has no contact with actual production. Many yeomen, particularly in business services, depend on industry for their livelihoods either directly or indirectly. The clerisy’s stultifying, and often job-toxic regulations and “green” agenda may be one reason why people engaged in farming, fishing, forestry, transportation, manufacturing and construction overwhelmingly disapprove of the president’s policies, according to Gallup.

    Obama supporters sometimes trace the loss of largely white working-class support — even to the somewhat less than simpatico patrician Romney — to “false consciousness.”  A recent Daily Kos article, charmingly entitled “The Masses are Asses,” chose to wave the old bloody shirt of racism, arguing that whites “are the single largest, and most protected racial group in this country’s history.”

    Ultimately this division — clerisy and their clients versus yeomanry — will decide the election. The patricians and the unions will finance this battle on both sides, spreading a predictable thread of half-truths and outright lies. The Democrats enjoy a tactical advantage. All President Obama needs is to gain a rough split among the vast group making around or above the national median income. He can count on overwhelming backing by the largely government dependent poor as well as most ethnic minorities, even the most entrepreneurial and successful.

    Romney’s imperative will be to rouse the yeomanry by suggesting the clerisy, both by their sheer costliness and increasingly intrusive agenda, are crippling their family’s prospects for a better life. In these times of weak economic growth and growing income disparity, the Republicans delude themselves by claiming to ignore class warfare. They need to learn how instead to make it politically profitable for themselves.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in Forbes.

    Mitt Romney image from Bigstock.

  • Utah Up, Chicago Down: Why Mitt Romney Should Embrace His Mormonism

    In his run for the Republican nomination, Mitt Romney downplayed his Mormonism—referring only to “faith” or “shared values”—in the face of small-minded members of the Christian right and the occasional cackle from the Eastern cultural avant-garde. But with his party’s nod in hand, Romney has been “coming out” in the run-up to the Republican convention, letting pool reporters join him and his family at a church service, and even choosing a member of the church to deliver the invocation on the night he addresses the Republican convention.

    The church’s appeal can be seen, in part, in the contrast between booming Utah and Salt Lake City and President Obama’s adopted home state of Illinois and hometown of Chicago.

    Utah netted 150,000 new arrivals from other states in the last decade, while Illinois lost a net of 70,000 people each year to other states. And Utah’s new arrivals include more than Mormons returning to Zion; Salt Lake County is now only 54% Mormon. Twenty-six percent of the county’s residents are minorities, mostly Hispanic immigrants.

    Romney himself reflects the enormous changes in the fast-growing and highly successful Church of Jesus Christ of Latter-day Saints (LDS), the official name of the religion, since the church (which continues to have an all-male clergy), opened itself to black members in 1978. Mormons now enjoy levels of education and wealth well above those of the average American.  Some 53.5% of LDS males have a post–high-school education, compared to 36.5% of the total U.S. population. And 44.3% of LDS females have a post-high-school education, compared to a national average of 27.7%. More impressive still, unlike mainstream churches, Mormonism is thriving; the church membership in North America grew 45 percent over the past decade to more than 6 million members—roughly matching the number of American Jews. 

    This is not Romney’s father’s—and certainly not his grandfather’s—LDS.

    A recent Gallup survey ranked Utah first in terms of quality of life, in part because of its citizens’ “low smoking habits, ease of finding clean and safe water, having supervisors who treat workers like a partner rather than a boss, learning something new or interesting on any given day, and perceptions that your city or area are ‘getting better’ rather than ‘getting worse.’”

    While Illinois competes with California for the nation’s worst credit ranking, Utah stands at the AAA apex. The job-growth rate in Salt Lake City and the state rank near the top while Chicago and Illinois have sunk relentlessly toward the bottom. Forbes recently ranked Utah “the best state for business and careers” for the second straight year; Illinois ranked 41st.

    While Utah undoubtably owes some of its success to its low-tax, low-regulation culture, and to smart incentives to draw in businesses, it’s also benefitted from a Mormon culture that promotes not supply-side but investment-driven growth.

    From its origins in the great Mormon migration in the late 1840s, the state and the church have built a legacy of careful planning. Brigham Young was many things, control freak and city planner among them, laying out the streets of the towns with exacting detail. The Mormons, wrote Wallace Stegner, a “gentile” who lived among them, “were the most systematic, organized, disciplined, and successful pioneers in our history.”

    Today this legacy is evident in the excellent infrastructure the state is building, including new highways that shame the pot-holed roads that people on the coasts commonly endure. Utahans have invested mightily in their universities, public and private, and are positioning themselves to be major players in fields from energy and agriculture to composite manufacturing, science, and engineering. They are not merely waiting around to ransack the intellectual capital of other states; for the last two years the University of Utah has ranked No. 1 in forging startups, besting institutions like MIT and Columbia.

    It is a bit distressing for a Californian to ride down Highway 15 south from Salt Lake City towards Provo and see buildings, often just finished, from some of Silicon Valley’s signature companies including Intel, Adobe, Twitter, eBay, and Fairchild Semiconductor. These are jobs that used to stay in California, but for a host of reasons—regulation and housing prices chief among them—have moved east to Utah.

    And most of the former Californians I’ve met in Salt Lake like the place, even if they sometimes feel uncomfortable with the Mormon aversion to such habit as drinking. Over the past 30 years, the city has changed for the better. Good food now proliferates—even if the elegantly dressed young Mormons still don’t order wine, much less vodka. The local arts and culture scene has evolved to, if not world-class levels, at least those seen in other similarly-sized cities.

    But what’s most impressive about Utahans may be their devotion to family. Although they make much noise about their dedication to “working families,” the Democratic Party increasingly relies on singles and the childless as its core base, particularly among white voters. In contrast, GOP-dominated Utah (which is largely white, but increasingly diverse) has the highest birth rate and youngest population in the nation. Families thrive there, including those who are not Mormon. It is almost like another America—one where most people raise their children, and push education and enterprise. If you’re getting deep into your 50s like me, you might remember that country.

    True, Salt Lake City now has some high-rise residential areas and some local planners, largely from the University of Utah, who push “smart growth.” But the big growth along the Highway 15 corridor is mostly single-family home communities, affordable and large enough to accommodate several offspring. They seem a lot like the places Long Island and the San Fernando Valley once were.

    Like the church around which it is built, the Mormon Zion in Salt Lake Valley has also changed. It has what may be the largest concentration of multilingual people in the country. With 55,000 missionaries at 340 mission sites across the globe, native English-speaking Mormons have learned more than 50 languages. Former Utah governor and Romney rival Jon Huntsman gained respectability—even among sophistos—for his fluent Mandarin.

    On the business side, Mormons’ linguistic skills have attracted loads of big international companies, such as Goldman Sachs, who need people capable of conversing in Lithuanian, Chinese, or Tongese. Goldman has 1,400 employees in Salt Lake City, making it the investment bank’s sixth largest location in the world.

    In contrast to the antediluvian nonsense sometimes expressed by right-wing evangelical Christians, the LDSers have become more cosmopolitan as their faith has expanded. Once a peculiarly American creed, with the vast majority of its faithful living in the Western United States, Mormonism has morphed into a global religion with over 11 million members—more than half of them outside the United States. Once narrowly white, the church’s biggest growth now is in Brazil, the Philippines, and the Pacific Islands. Even in the U.S., converts have made for an increasingly diverse church, with blacks and Hispanics accounting for one in five new Mormons, according to Pew.

    It’s not likely that the church will be portrayed by the Obama campaign and its associated media outlets in this way. They also are sure to continue portraying millionaire Mitt as the greedy capitalist devil incarnate. Perhaps to avoid getting drawn into a discussion of his faith, Romney rarely mentions that he tithes 10 percent of his substantial income to support church activities. Such tithing, expected of all church members, helps explain why Utahans are easily the nation’s most charitable citizens, according to The Chronicle of Philanthropy—contributing two and a half times more of their income than Illinoisans.

    Yet most appealing about Mormons is their focus on self-help and community outreach, and the church’s highly structured and efficient relief organization—something Romney has never communicated well. Mormons are remarkable for their ability to rise to the occasion during natural disasters like Hurricane Katrina and the earthquake in Haiti.

    “Mitt may not be Bill Clinton or Barack Obama—he’s a boring guy, but he’s not the jerk people think he is,” says Joe Cannon, the former publisher of the Deseret News, the church-owned paper. “When you are a bishop,” as Romney was in Boston, says Cannon, “you are running a huge welfare state on your own. You spend a lot of time helping the poorest and most dysfunctional congregants.”

    In the end, Utah’s Mormon-created reality is bigger than one relentlessly ambitious man’s foibles and tax dodges; Mormonism is the enterprise that transformed a desert province into a productive garden. That’s the story that Romney needs to share between now and November. If he fails, we might see a more appealing Mormon, Jon Hunstman, remind us of this success story in 2016.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in The Daily Beast..

    Mitt Romney photo by BigStockPhoto.com.

  • America’s Baby Bust: How The Great Recession Has Jeopardized Our Demographic Health

    At the turn of the century, America’s biggest advantage was its relatively vibrant demographics. In sharp contrast with its major competitors — the E.U., Russia, China, Japan — the United States had maintained a far higher birthrate and rate of population growth.

    But the 2010 Census showed that in the past decade America’s birthrate slipped below at least one European country (France) and under the pace necessary to replace our current population. Immigration, both legal and illegal, is also slowing, in part due to plunging birthrates in Mexico and other Latin American countries. As one National Geographic report from Brazil has it, women there, too, are saying: “A fábrica está fechada.” The factory is closed.

    America’s sinking birthrate is in great part a function of our wobbly economy. The decline, notes the Pew Research Center, largely coincides with the onset of the 2007 real estate crash and the financial crisis the following year.

    The recession had a disproportionate impact on people of child-bearing age, who suffered higher unemployment and steeper income declines than their elders. In the process, the U.S. fertility rate dropped from over 2.1 births per woman in 2007 to 1.9 last year, below replacement rate for the first time since the mid-1980s. The 2010 Census found that the number of households that have children under age 18 was 38 million, unchanged from 2000, despite a 9.7% growth in the U.S. population over that period.

    Of course many environmentalists would celebrate these numbers, and some nativists as well. But the problem is not that we need more people per se — we need an increase in younger, working-age people to make up for our soon to be soaring population of retirees. Young people are the raw capital of the information age and innovation, and new families are its ballast and growth market.

    Yet many developed countries are facing dramatic labor force deficits. By 2050, according to Census projections, there will be 40% fewer workers in Japan then there were in 2000, 25% less in Europe and 10% fewer in China; only projections of higher birthrates and immigration allowed demographers to suggest the U.S. workforce would keep growing.

    Without these future workers our already tottering pension system will become even more untenable, as is occurring in Europe and Japan. The bad part about slow population growth is that it depresses the economy, which in turn works against family formation.

    Of course, there are others ways to deal with this imbalance of too many retirees and too few workers. One is to raise taxes. The billionaire philanthropist Pete Peterson estimates that most developed countries will need to increase their spending on old age benefit promises from 9% to 16% of GDP over the next 30 years. This would require an increase in taxes of 25% to 40% — even in the already high-tax countries of northern Europe.

    Raising taxes to transfer funds to the older generation is already happening in some of the most rapidly aging countries. Japanese lawmakers just voted to double the country’s sales tax by 2015 precisely for this reason. Due in large part to low birthrates and soaring numbers of seniors, Japan is now the most heavily indebted high-income country in the world.

    Germany likewise is now considering a special tax on younger workers to fund the pensions of the growing ranks of oldsters. Chancellor Angela Merkel has proposed the 1% income tax as a “demographic reserve” for a workforce that is expected to shrink by 7 million by 2023. “We have to consider the time after 2030, when the baby boomers of the ‘50s and ‘60s are retired and costing us more in health and care costs,” explained Gunter Krings, who drafted the new proposal for Germany’s ruling Christian Democrats.

    Higher taxes, or its evil twin, austerity, are unlikely to solve this dilemma. Other issues may constrain family growth — high urban population densities, women’s growing role in the workforce, declining religiosity — but one critical precondition for spurring family growth is to expand the economy. Without growth, the long-term decline of most high-income countries, including the United States, is all but assured.

    This turns on its head the commonplace assumption that societies reduced their birthrates as they got wealthier. This pattern was seen in the United States and Europe by the 1960s and, even more so in East Asia, whether governments adopted baby-suppressing (notably China) methods or, more recently, as in Singapore, have tried to promote family formation.

    But more recently it appears that declining economics — and strong public perceptions that things will get worse — can also convince people not to have children. In 2010, according to Gallup, most European countries have been expecting harder times; pessimism was particularly strong in Spain, Italy, Greece, the Czech Republic and the United Kingdom. Stories about divorced Spanish or Italian young fathers sleeping on the streets or in their cars is not exactly a strong advertising for parenthood.

    In 2011, birthrates fell in 11 of the 15 European countries that have reported numbers. Among the countries reporting declines were Finland and Denmark, where rates had been ticking slightly upwards.

    The impact has been even greater in countries like Spain and Greece, where overall joblessness has hit one in four and youth unemployment is roughly 50%. Some of these countries face the prospect of considerable de-population in the coming decades.

    “A more pessimistic economic outlook” is one key reason that European birth rates have been depressed and family formation so slow, confirms Austrian demographer Wolfgang Lutz. Overall fertility has fallen to roughly 1.5, well below replacement rate and all but guaranteeing a demographic-based economic crisis a decade or two sooner. Some eastern countries like Latvia now have fertility rates approaching 1.2. Lutz believes that once birthrates fall to these levels, there is no turning back.

    Yet it is Japan that perhaps shows this renewed relationship between economics and birthrates most clearly. In 1991 many economists predicted that Japan would overtake the U.S. economy; instead U.S. GDP grew much faster and China supplanted Japan in 2010 as the world’s second-largest economy. As prices deflated and opportunities shriveled, Japanese grew less interested in either starting or growing families.

    It could get even worse: Japanese teens seem not only less interested in work but in each other. In what seems an enormous reversal of adolescent nature, 36% of Japanese males 16 to 19 years old have admitted to pollsters having no interest in sex, and some even despise it. The figure is even higher (59%) for females in the same age category. For many, notes Japanese sociologist Mika Toyota, hobbies, vacations, food and computer games are often more alluring than pursuing the opposite — or the same — sex.

    It may well be that American birthrates have been more impacted than Europe’s by the recent recession due to the relative weakness of the country’s social safety net. Finnish demographer Anna Rotkirch has pointed out that Europeans have tried to mitigate the impact of recession through generous transfer payments to young families. This may account as well for the fact that France’s birthrate last year surpassed that of the United States.

    But without strong economic growth, it seems likely that family formation and birthrates will continue downward everywhere, particularly as economic realities force reductions in state aid. A mindlessly ever-expanding welfare state, trying to enlist more clients, even tiny ones, will diminish private sector growth and usher in even more quickly the onset of “demographic winter.” A lethal demographic cocktail of high taxes, low growth and fewer babies could set the stage for an even greater financial crisis in the decades ahead.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    This piece originally appeared in Forbes.

    Childhood kids photo by BigStockPhoto.com.