New Geography

Category: Economics

  • Urban Talent Sheds Say a Lot About Cities

    Jim Russell pointed me as the workforce report program that LinkedIn runs.  They use their data to show trends in 20 major job markets.

    For each market they track, they put together a map of the 10 cities that market gains the most workers from and the ten in loses the most workers too.

    These are interesting maps in their own right. They also highlight the extremely parochial nature of the talent flows into Midwestern cities. It’s pretty stark, actually. Here’s a set of comparisons, looking strictly at inflows. There are also outflow and gross migration charts and more information that’s interesting too, but I’ll leave you to dig into that yourself.

    Minneapolis vs. Denver vs. Seattle

    Let’s take a look at these three roughly peer cities. First, the top ten cities for Minneapolis.

    Despite the Twin Cities enjoying a high reputation withing the Midwest region, their draw remains highly regional. Their top draws are from adjacent states plus Chicago.

    By contrast, here’s Denver.

    And here’s Seattle:

    The difference is stark.

    Chicago vs. New York vs. San Francisco

    Living up to its reputation as the capital of the Midwest, Chicago’s draw is from a tightly focused region.

    Now, here’s New York:

    Four of New York’s top ten draws are actually from outside the country. That’s pretty amazing.

    And here’s San Francisco.

    You see the flows in mostly from other major tech hubs and big cities.

    Again, a pretty start difference.

    Cleveland vs. Nashville

    We see the same thing in smaller tier cities. Here’s Cleveland.

    And here’s Nashville.

    Again, I’d encourage you to spend some time over at LinkedIn. You can tell a lot about these cities and their economies just by their migration maps. You can also instantly see another dimension of the challenge facing Midwestern cities.

    This piece originally appeared on Urbanophile.

    Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

  • Las Vegas Lessons, Part II

    A couple weeks ago I wrote some thoughts after a recent visit to Las Vegas. Most of what I wrote about concerned the Strip and downtown areas of the city, without question the two most recognizable and most frequently visited parts of the region. But in a rapidly growing region of nearly 2.2 million people (the Las Vegas Valley held only 273,000 residents in 1970, meaning it has increased its population by 8 times since then), clearly there’s much more to the region than its most iconic and visible parts. Here I’ll offer some thoughts on the broader region, its built environment, its economy, and thoughts on its future.

    First, for those tl;dr readers who won’t click through to read Part I, here’s a quick summary of it:

    • The Strip and Las Vegas are two entirely different entities.
    • Strip is a great pedestrian experience.
    • The Strip is an exclusively private space.
    • Downtown Las Vegas is quite different from the Strip.
    • There are poor linkages between Downtown Las Vegas and the Strip.
    • The north end of the Strip is plagued with high-profile failed projects.

    Again, as someone who’s “part urbanist, part sociologist, and part economist,” I offer some observations and thoughts on the rest of the city and region.

    The balance of the city and region consists of unremarkable suburbia. This is probably evident to anyone who puts any amount of thought into it, but it does bear repeating. Step away from the Strip and downtown, and Las Vegas’s built environment is amazingly consistent: according to the U.S. Census Bureau American Community Survey in 2015, the metro area is about 60% single family detached homes, with about 4,000-6,000 people per square mile throughout. There’s no sudden or even slight gradation in density as one commonly finds in many eastern cities; the city quickly establishes its suburban character and spits it out relentlessly. And, I’ve been struck on this visit and previous ones at how similar Vegas looks to suburbia in other places. Yes, there are newer, upscale areas that stand out (Summerlin comes to mind), but if you replace Vegas’s palm trees with oaks and elms, it looks a lot like suburbia anywhere else in America, except with Spanish tile roofs. Similarly…

    Nothing in the region is old; the region will have to learn the art and skills of redevelopment. Fifteen years ago when I did some consulting work in Las Vegas, I thought it was weird when city officials referred to West Las Vegas, just northwest of downtown, as “historic”. Most of the homes and businesses there were built in the ’50s and through the ’70s, and in my mind they were the kind of structures that were just beginning to establish some character. But when the median year of structure built in the region is 1995 (the same for Chicago’s metro is 1967), you simply won’t find the pre-WWII type of development that is called historic in other places. There will come a time when the structures of the Las Vegas Valley will be viewed as obsolete and inconsistent with modern living (whatever that is), and the region will have to undergo one of the more difficult transitions for municipalities — shifting from easy greenfield development to complex redevelopment.

    Low wage and low skill jobs proliferate in the region. Like the unremarkable nature of the suburban pattern, here’s another conventional observation that bears repeating. As one would expect, the accommodations/food services employment sector dominates in Las Vegas — nearly one-third of all Las Vegas workers work in hospitality. Those have traditionally been low-paying jobs, and that’s true of the region today. Overall, 44% of Vegas workers earn less than $40,000 a year. Contrast that with Austin, a similarly-sized and similarly-fast-growth metro, where only 9% of workers are employed in accommodations/food services, and just 34% of workers earn less than $40,000 a year (and consider that Austin is a college town that has many recent grads, possibly pushing incomes downward). My concern for Vegas in this regard is that there is growing research that suggests that the kind of work automation that decimated much of the Rust Belt’s manufacturing jobs may now enter a phase that targets food services, administration and office support, sales and even retail jobs — precisely the kinds of jobs that many new Las Vegas residents moved there to occupy. Las Vegas workers could be quite vulnerable to the kinds of challenges that reshaped the Rust Belt.

    The Las Vegas Valley is nearing its physical limits. According to Wikipedia, the Las Vegas Valley is a 600 sq. mi. basin surrounded on all sides by mountains. I don’t know the precise delineations between flat and inclined topography, but a look at Google Earth tells me the region is near its limit:

    I could be wrong, but it looks as if Vegas has available land to the north and southwest, and the Valley might be approaching 90% developed. It could be that the region hits the wall (literally) within the next 10 years. What will that mean for a region that is as low-density suburban as this one? Will the Valley’s communities have the ability to shift their focus inward? Time will tell.

    What happens to the region if tourism… changes? Wikipedia’s Atlantic City page has a good explanation for the decline of tourism there after World War II. It connects its decline with the car; prior to the war, people generally traveled to Atlantic City by train and stayed for a week or two. Cars made people more mobile and they made shorter visits. Suburbanization and its creature comforts, like backyards and air conditioning, also took visitors away from AC. The final nail in the coffin was affordable jet service, opening up vacation spots like Miami, Havana, and the Bahamas (and Vegas) in the 50’s and onward. I don’t know what challenge is out there for Vegas now, but what will be crucial to the region’s survival is how it responds.

    What impact will climate change have on a desert resort city? When flying into Las Vegas I couldn’t help but notice the low level of Lake Mead, just southeast of the city. It was clear from the air; bleached rock that had once been under water now exposed. Las Vegas is blessed to have one of the largest reservoirs in the nation at its back door, but could continued drought and increased demand for water undermine everything? The Strip’s casinos tout themselves as leaders in water conservation, but whether their efforts will be enough as conditions worsen is an open question.

    Las Vegas is truly a unique place. It’s a place that seems to serve a certain time and space, and is concerned about now more than its future. But I’m sure if the region squints its eyes and looks, it will see the future is getting closer. It will need to figure out how it will be sustainable as that future approaches.

    This piece originally appeared on The Corner Side Yard.

    Pete Saunders is a Detroit native who has worked as a public and private sector urban planner in the Chicago area for more than twenty years.  He is also the author of “The Corner Side Yard,” an urban planning blog that focuses on the redevelopment and revitalization of Rust Belt cities.

    Photo by Stan Shebs [GFDL, CC BY-SA 3.0 or CC BY-SA 2.5], via Wikimedia Commons

  • California’s Global Warming High-Speed Train

    The California High-Speed Rail Authority promises to “achieve net zero greenhouse gas (GHG) emissions in construction” and is committed to operate the system on “100% renewable energy” by contracting for “400 to 600 megawatts of renewable power”. These promises may please environmentalists, but they cannot be kept.

    Construction Emissions

    The Authority has provided only limited information regarding GHG construction emissions. Its 2013 Emissions Report estimated 30,107 metric tons in GHG “direct emissions” for the first 29 miles of construction. “Indirect emissions” associated with the manufacture and transport of materials, primarily concrete, steel, and ballast were not reported because, according to the Authority, precise quantities, sources, and suppliers were not known. A more plausible reason is the their desire to hide from the public more than 90% of GHG emissions associated with their project. Regardless, recent testimony by the Authority’s CEO clearly indicates that indirect emissions can now be tallied.

    Speaking before the Assembly High-Speed Rail Oversight Committee on January 27, 2016, CEO Jeff Morales, spoke at length on how costs were estimated. He described the assemblage of 200,000 individual line items including concrete, steel, dirt, electrical, etc. and said each includes a unit cost which is multiplied by the units required to build the system.

    Total GHG construction emissions would still be unknown today were it not for the work of professors Mikhail V. Chester and Arpad Horvath working in UC Berkeley’s Department of Civil and Environmental Engineering. They studied this issue, published their findings in 2010, and estimated that 9.7 million metric tons of GHG would be emitted during the construction of the statewide system; primarily because of the production of massive amounts of concrete and steel. Using mid-level occupancy for the three competing modes of travel (high-speed train, auto, and airplane) the authors estimated it would take 71 years of train operation to mitigate the project’s construction emissions. California’s Legislative Analyst Office came to a similar conclusion in a 2012 report critical of using GHG reduction funds to pay for Phase 1 (Los Angeles to San Francisco) of the statewide system because “if the high-speed rail system met its ridership targets and renewable electricity commitments, construction and operation of the system would emit more GHG emissions than it would reduce for approximately the first 30 years”. Here, the LAO appears to be citing an updated Chester and Horvath study, published in July 2012, which focused on only Phase 1 of the high-speed rail project, as outlined in the Authority’s Revised 2012 Business Plan. They took into account additional highway infrastructure that could be avoided as well as claims that “a future CAHSR system will likely see improved train performance and an opportunity for increased renewable electricity usage”.

    However, the Authority promised “zero net greenhouse gas emissions in construction”. A reduction in California’s GHG emissions due to the trains’ operations was to help reduce the state’s future GHG emissions, not merely mitigate construction releases. The Authority’s zero construction emissions promise relies heavily on a tree planting program. More than 5 million trees, each more than 50 feet tall, would need to be grown and perpetually maintained to recapture the 9.7 million tons of GHG construction emission. However, one year into construction, the Authority’s CEO admitted that not a single tree had been planted. Worse, as part of their project, the Authority plans to cut down thousands of trees south of San Francisco to electrify Caltrain trackage.

    Emissions from Operation

    Chester and Horvath generously assumed the trains would run on a power mix relatively high in renewable sources. However, high-speed electric trains would replace fossil fueled propelled automobiles and airplanes. When Phase 1 is completed, the trains will place a new demand on the electric grid that must be met immediately by starting up an idle generator capacity. It may be a peaking unit in California powered by natural gas or a coal burning plant in Utah. The exact source is unknowable, but it will not be a wind or solar powered electric plant. These sources will already be generating all the power they can produce when the first trains require additional power.

    The Authority’s business plans are constantly changing as are their assumptions on energy consumption and energy cost. The 2012 Business Plan is cited, a plan that referred to paying 15.2 cents/kWh for electrical energy, inclusive of a 3 cent premium for renewable energy. Energy consumption was established at 63 kWh/mile. Train miles traveled between 2022 and 2030 was projected to be 99 million, resulting in an energy use of 6,300 million kWh. In order to make good on their claim that they will power the trains with 100% renewable energy the Authority needs to fund the construction of the necessary renewable power plants.

    California Valley Solar Ranch, a 250MW facility producing 650 million kWh/year recently built at a cost of a $1.6 billion ($1.2 billion financed at a 3.5% interest rate using a federal loan guarantee coupled with a check from the U.S. Treasury for $430 million), serves as a proxy for the needed capital. The Authority’s trains would consume 1,200 million kWh in 2030 and need the output of 1.85 Solar Ranches; 460MW of capacity costing $3.0 billion. A premium of 42 cent/kWh, fourteen times the Authority’s offer, would be needed to raise the necessary capital by 2030. More than 20% of this capacity, costing half a billion dollars, must be constructed before the first trains run. Otherwise, those trains will be totally powered by fossil fuels, meaning the GHG emissions per passenger mile will be no better than for two passengers traveling in an automobile which meets the federal fuel efficiency standards scheduled to be in place in 2022.

    The issue of global warming needs to be addressed. However, the planting of millions of trees and the spending of billions of dollars on a fossil fuel propelled train is not a practical or cost effective way to address the problem. From the climate point of view, the Authority’s project is detrimental because of its massive construction GHG emissions and because it diverts funds from other actions, such as providing financial incentives for ride-sharing and for the purchase of zero emission or low emission vehicles that could really help address the serious problem of global warming.

    Michael J. Brady has been a litigator and appellate lawyer for 50 years; he has worked on opposing California’s high speed rail for 10 years.

    Mark Powell has been assisting Mike Brady for seven years; he is a retired chemist for Union Oil Co.

    Photo by California High-Speed Rail Authority [Public domain], via Wikimedia Commons

  • Amazon Eats Up Whole Foods as the New Masters of the Universe Plunder America

    “We must make our choice. We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.” —Justice Louis Brandeis

    With his $13.7 billion acquisition of Whole Foods, Amazon’s Jeff Bezos has made clear his determination to dominate every facet of mass retailing, likely at the cost of massive layoffs in the $800 billion supermarket sector.

    But this, if anything, understates the ambitions of America’s new ruling class, almost entirely based in San Francisco and Seattle, as it moves to take over industries from entertainment and transportation to energy and space exploration that once thrived and competed outside the reach of the oligarchy.

    Brandeis posed his choice at a time when industrial moguls and allied Wall Street financiers dominated the American economy. Like the oligarchs of the past, today’s new Masters of the Universe are reshaping our society in ways that could, if unchallenged, undermine the foundations of our middle-class republic. This new oligarchy has amassed wealth that would impress the likes of J.P. Morgan. Bezos’ net worth is a remarkable $84.7 billion; the Whole Foods acquisition makes him the world’s second richest man, up from the third richest last year. His $600 million gain in Amazon stock from the purchase is more than the combined winnings of Whole Foods’ 10 top shareholders.

    The Emergence of Oligarchic America

    Founded two decades ago, Amazon revenue has grown eightfold in the last decade. Bezos now wants to “reorganize the world,” as one tech writer put it, “as an Amazon storefront.” He has done this by convincing investors that despite scant profits, the ample rewards of monopoly await. Kroger, or the corner-food store, enjoys no such luxury. With a seemingly endless supply of capital and the prospect of never-ending expansion, the Silicon Valley-Puget Sound oligarchy now accounts for six of the world’s 13 richest people, and virtually all billionaires who are not either very old or merely inheritors.

    Apple, even as it it evades American taxes, enjoys a $250 billion cash reserve that surpass that of the United Kingdom and Canada combined. Their new $5 billion headquarters in Cupertino—like those of firms such as Facebook, Alphabet, and Salesforce.com—reflect the kind of heady excess that earlier generations of moguls might have admired. The peculiar nature of the tech economy rewards even to failures, like Yahoo’s Marissa Mayer, who earned $239 million, almost a million a week, as she drove one of the net’s earliest stars toward oblivion.

    The tech booms of the 1980s and 1990s rode on a wave of entrepreneurialism that provided enormous opportunities for millions of Americans, the current wave is characterized by stagnant productivity, consolidation, and disparities in wealth not seen since the mogul era. As one recent paper demonstrates, the “super platforms” of the so-called Big Five depress competition, squeeze suppliers, and drive down earnings, much as the monopolists of the late 19th century did.

    Indeed for most Americans the once-promising new economy has meant a descent, as one MIT economist recently put it, toward a precarious position usually associated with Third World countries. Even Silicon Valley, the epicenter of the oligarch universe, has gone from one of the most egalitarian places in America to a highly unequal one where the working and middle class have, if anything, done worse, in terms of income, than before the boom.

    The Oligarchs Outsmart the Political Class

    In the past, progressive political thinkers like Brandeis sought to curb over-concentrated wealth and power. In contrast, today’s Democratic establishment rarely addresses such issues. That’s no wonder given that the party is now financed in large part by the tech giants, which have backed in almost lock-step the environmental, social, and cultural agenda that dominates today’s left. In exchange, they have bought political cover for things such as misogyny, lack of ethnic diversity, and of unions and fair labor practices that old-line companies like Walmart, Exxon, or General Motors could never enjoy.

    Hillary Clinton made clear that she would, at best, tinker at the edges of the so-called sharing economy. That after President Obama’s Justice Department did virtually nothing to employ antitrust to block the tech oligarchs’ domination of key markets like search, social media, computer, and smartphone operating systems. Nor did they pressure them to stop avoiding taxes that burden most other businesses.

    Nor can we expect the Republicans, with their instinctive worship of great wealth, to stand up against monopoly and abuse of power. A White House run by Donald Trump, whose true religion seems to be that of the Golden Calf, and his Goldman Sachs economic henchmen are inherently unable to oppose ever greater concentration of money in the hands of a select few. It’s no surprise that so far, in terms of stocks, the tech giants have been among the biggest winners under Trump.

    Controlling the Means of Information

    The Masters’ ascendency has been enhanced by their growing control of the means of communications. Facebook is already the largest source of news for Americans, particularly the young. They, along with Google, seem capable of shaping information flows to suit their particular world view, one increasingly hostile to any dissenting opinions from the right. (One key to understanding post-election concerns about “fake news” is to realize that a staggering 99 percent of growth in digital advertising in 2016 went to Google and Facebook.) At the same time, those two, along with Apple and Amazon, increasingly shape the national culture, essentially turning Hollywood into glitzy contract laborers.

    But no one practices the politics of oligarchy better than Bezos. Under his ownership The Washington Post has been transformed into the Pravda of the gentry left. Last year, for example, they worked overtime to undermine Bernie Sanders’ campaign, whose victory might have led to stronger antitrust enforcement and the confiscation of some of their unprecedented wealth. Once Sanders was dispatched, Bezos, fearing the rise of uncontrollable Trumpian populism, sank his editorial resources into supporting the big money favorite, Hillary Clinton.

    The New Political Agenda

    Populism, left or right, represents the only viable threat to oligarchic ambitions. Bank of America’s Michael Harnett recently warned that if the growth of stock market wealth continues to be concentrated in a handful of tech stocks, that “could ultimately lead to populist calls for redistribution of the increasingly concentrated wealth of Silicon Valley.”

    Deflecting populism is the central imperative of an oligarchy. They feel their dominance as evidence of their superior intellect and foresight, not the result of such things as political influence, or easy access to capital. They embrace, as former TechCrunch reporter Greg Ferenstein put it, the notion of “a two-class society of extremely wealthy workaholics who create technologies that allow the rest of society to enjoy leisurely prosperity. The cost for this prosperity will be inequality of influence.”

    What Google’s Eric Schmidt calls the Valley’s “religion in-of-itself” has little in common with resuscitating grassroots Democratic capitalism, the old dream of libertarians, or empowering the working class, that of old leftists. The founders of the big tech firms may embrace progressive ideas on the environment, free trade, and immigration, but have little use for unions or raising capital gains rates.

    Overall, notes Ferenstein, they eschew nationalism, favoring global governance, want more immigration and embrace the notion of a government nanny state to tell the masses how to live. They also prefer highly unequal conditions of urban density over the more traditionally egalitarian suburbs. Largely childless San Francisco, impossibly expensive and deeply divided by class, is the preferred model of the future.

    The Problem is People

    People, little or otherwise, now constitute the Masters’ biggest problem. Unlike the old moguls like Andrew Carnegie or Henry Ford, the new Masters do not promise greater prosperity, or even decent jobs for the middle or working class. Their vision, increasingly, seems to be a world where most people’s labor is largely superfluous, and will need to be satiated with regular basic income from the state, a position now widely embraced by such luminaries as Mark Zuckerberg and Elon Musk, supplemented by occasional “gig” work.

    They imagine a future where few will ever own homes or control any real assets. Rather than being parts of a geography or even a country, the increasingly socially isolated masses can be part of Zuckerberg’s “global community” while ordering food from Amazon, delivered by a drone from an automated warehouse, employing social media and virtual reality to fill their long periods of idleness.

    As Brandeis warned, this vision—dominated by the interests and influence of the few who possess the bulk of the wealth—is incompatible with the democracy that we have known.

    This piece originally appeared on The Daily Beast.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Photo by National Museum of American History, via Flickr, using CC License.

  • Is America Now Second-Rate?

    President Donald Trump’s recent renunciation of the Paris climate change accords has spurred “the international community” to pronounce America’s sudden exit from global leadership. Now you read in the media aspirations to look instead to Europe, Canada, or even China, to dominate the world. Some American intellectuals, viewing Trump, even wish we had lost our struggle for independence.

    Yet, perhaps it’s time to unpack these claims, which turn out to be based largely on inaccurate assumptions or simply wishful thinking. In reality, these countries are hardly exemplars, as suggested by the American intellectual and pundit class, but rather are flawed places unlikely to displace America’s global leadership, even under the artless Trump.

    We’ll always have Paris, or is it Beijing?

    California Gov. Jerry Brown’s recent trip to China reflects the massive disconnect inherent in the progressive establishment worldview. The notion that the country that is the world’s largest emitter of carbon dioxide, emitting nearly twice as much as the United States, and is generating coal energy at record levels, should lead the climate jihad is so laughable as to make its critics, including Trump, seem reasonable. All this, despite the fact that the U.S., largely due to the shift from coal to natural gas, is clearly leading the world in greenhouse gas reductions.

    Paris is good for China in that it gets it off the hook for reducing its emissions until 2030, while the gullible West allows its economies to be buried by ever-cascading regulations. The accords could have cost U.S. manufacturers as many as 6.5 million industrial jobs, while China gets a basically free pass. President Xi Jinping also appeals to the increasingly popular notion among progressives that an autocracy like China is better suited to address climate change than our sometimes chaotic democratic system.

    Xi has played the gullible West with a skill that would have delighted his fellow autocrat, Joseph Stalin, who did much the same in the 1930s. (“Purges? What purges?”) Of course, Xi does not have to worry much about criticism from the media — or anywhere else. Trump may tweet insanely and seek needless fights with the media, but critics of the Chinese Communist Party end up in prison — or worse. To accuse Trump of loving dictators and then embrace Xi seems a trifle dishonest.

    Ultimately, the Paris accords are much ado about nothing. The goals will have such little impact, according to both rational skeptics like Bjorn Lomborg and true believers like NASA’s James Hanson, as to make no discernible difference in the climate catastrophe predicted by many greens. In reality, Paris is all about positioning and posturing, a game at which both Brown and Xi are far more adept than the ham-handed Trump.

    Read the entire piece at The Orange County Register.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Photo by Michael Temer via Flickr, using CC License.

  • Connecticut’s Future is Suburban, Not Urban

    Connecticut is now grappling with a fiscal and economic crisis that, according to some leading Democrats, has been caused by ineffective urban policy. In late May, Hartford-based insurer Aetna confirmed long-discussed rumors that it will be moving its headquarters from Connecticut. General Electric announced plans to move from Fairfield, Connecticut to Boston in January 2016. Though the Great Recession officially ended eight years ago, state budget forecasters are projecting a $2 billion deficit for next fiscal year, or 11 percent of the budget. One policy report published in March, when rosier estimates pegged Connecticut’s deficit at only 9 percent, ranked Connecticut as having the 8th largest shortfall among American states. Hartford, the state capital, is on the verge of bankruptcy.

    What course should Connecticut take to stabilize government budgets and stimulate the economy? Gov. Dannel Malloy and Hartford mayor Luke Bronin believe that stronger cities are the answer. As Malloy said recently, explaining why his budget increases state aid for cities, “I think there is a body of people who don’t understand urban environments, and I think Connecticut has too long pursued a public policy of insufficient support for our urban environments.”

    But there are many questions to raise about just how vital urban Connecticut is to the state’s future. Connecticut’s major cities have their charms, especially Hartford and New Haven. But in terms of meeting the enormous fiscal and economic challenges with which the state is now faced, they are and will remain less important than its suburban regions.

    With all due respect to Gov. Malloy and Mayor Bronin, there’s a certain glibness in how they presume that Connecticut’s poor urban areas can be revitalized. It’s not as if their predecessors haven’t been trying. Any visitor to downtown Hartford and New Haven will be struck by several imposing works of mid-20th century modern architecture. Examples include Constitution and Bushnell plazas in Hartford and New Haven’s Temple Street Garage. These projects date back to the “urban renewal” era of the 1950s and 1960s, when massive government resources were devoted towards breathing new life into tired central cities.

    New Haven was nationally-renowned for its urban renewal efforts, both because it focused just as much on rehabbing old buildings as demolishing them . Mayor Richard Lee’s “human renewal” social service programs anticipated criticisms that poverty can’t be cured through real estate development alone. But the widely celebrated Mayor Lee failed to hit the mark. New Haven, the “Model City,” was rocked by a race riot in 1967, as was Hartford in 1969.

    Despite growing evidence that Connecticut cities were not coming back, urban renewal in modified forms would continue throughout the decades. In 1974, Hartford gained the “Hartford Civic Center,” (now known as the XL Center), a sports and entertainment venue where the NHL’s Hartford Whalers played from 1980 to 1997. The state’s convention center opened in Hartford in 2005, and a minor league baseball park just came online in April. And yet, among American cities with a population above 100,000, Hartford’s poverty rate is 8th highest in the nation. Mayor Bronin himself describes the current fiscal state of affairs in Hartford as “the largest budget crisis in our city’s history.”

    State government is not much better off. Connecticut’s budget deficit is driven by escalating costs for public pensions, which powerful government unions have balked at reforming, and weak tax receipts despite—or perhaps because of—a series of recent income tax hikes. Gov. Malloy, a progressive Democrat, has recently taken the position that trying to further increase the tax burden on the state’s 1 percent would be counterproductive.

    Urban revitalization is an unsound strategy for addressing budget deficits because creating strong cities is the work of generations. The secret of Boston’s success is reflected in a famous saying attributed to Daniel Patrick Moynihan: “If you want to build a world-class city, build a great university and wait 200 years.” Cities like New York that are now envied as talent magnets have had that reputation going back many years. Even in the 1970s, when New York was plagued by high crime and the threat of insolvency, it was still a national leader in finance, media and the arts.

    Bronin and Malloy have said that they understand Hartford can’t become New York or Boston. But among Hartford’s true peers—formerly industrial small and mid-sized cities throughout the northeast and Midwest—it is very difficult to find any examples of an authentic comeback city. In an analysis I recently wrote about Hartford, New Haven, Waterbury and Bridgeport, I found that, since 1970, the number of poor people living in these cities had increased by 56.1%, 40.8%, 153.6% and 86.3%, respectively. Over the same span, all have seen their total populations decline with the exception of Waterbury, which has grown by 1.7%.

    Despite all the hype over America’s urban renaissance, cities remain a tough sell for the middle class. However magnetic a city may be in attracting young millennials, as studies by William Sander of DePaul University and William Testa of the Chicago Fed have demonstrated, the more educated you are, the more likely you are to opt for suburbs when you settle down. If, 20 years ago, a given city had an underperforming school system that was unattractive to middle class families, it most likely remains unattractive to them now. According to the most up-to-date Census data we have, within most major metros, suburban areas are growing more rapidly than central cities.

    Connecticut is often associated with suburban blandness. But it happens to boast one of the most talented labor forces in the nation. A 2016 McKinsey report ranked Connecticut second among states in productivity (GDP per worker). Statewide, 16.6 percent of adults have advanced degrees, a rate which trails only Massachusetts and Maryland. (Only 6.7 percent of adults in Hartford have advanced degrees.) In coming years, the high levels of productivity and educational attainment among Connecticut’s suburban residents will be essential to any growth the state manages to achieve. Fairfield County Connecticut boasts some of the strongest public schools in the nation, whereas the state’s urban school districts remain troubled.

    As Connecticut officials contemplate a policy response to Aetna’s exit, it is crucial that they not lose sight of the following. We don’t know how to revitalize poor old industrial cities, especially small and mid-sized ones. Middle class families with children are opting for the suburbs just as reliably as in prior generations. One of the soundest economic development strategies is for a state to offer potential employers a productive and educated workforce, which Connecticut plainly does. State officials should build on current virtues, avoid chasing fads, focus more on budget discipline, and by all means stop trying to make Connecticut into something it’s not.

    Stephen Eide is a Senior Fellow at the Manhattan Institute.

    Photo by Doug Kerr, via Flickr, using CC License.

  • The Superstar Gap

    The biggest challenge facing many cities in transitioning to the knowledge economy is a shortage of “A” talent, especially true superstars.

    All “talent” isn’t created equal. Crude measures such as the percentage of a region with college degrees, or even graduate degrees, don’t fully capture this. It is disproporationately the top performers, the “A” players and superstars that make things happen.

    Sections of the knowledge economy have long been geared to superstars. Economist Enrico Moretti cites research on biotech hubs, in which he notes that it is not just having a top university nearby that mattered in establishing biotech clusters, but having the true handful of academic superstars researchers. In The New Geography of Jobs, he writes:

    In a fascinating and now classic article and in a series of subsequent studies, they argued that what really explains the location and success of biotech companies is the presence of academic stars – researchers who have published the most articles reporting specific gene sequencing discoveries. Among top universities, some institutions happened to have on their faculties stars in the particular subfield of biology that matters for biotech; others had comparable research but did not have stars in that specific subfield. The former group created a local cluster of biotech firms while the latter did not.

    Richard Florida devotes a significant amount of his latest book The New Urban Crisis discussing the rise of the superstar phenomenon, which he also links to specific superstar cities.

    Superstars are important in tech because of the 10x principle I mentioned in my recent post on the Silicon Valley mindset. The best coders are 10x as productive as the merely very good coder. The top entrepreneurs are probably 100x or or more. The presence of superstars, along with some amount of good fortune, can transform the economy of a city or region.

    Jeff Bezos is a superstar. Mark Zuckerberg is a superstar. Michael Bloomberg is a superstar.

    These superstars are disproporationately located in only a handful of regions.

    To see this effect, just look at Austin vs. Seattle. Austin is a booming, prosperous city with a major tech industry. Yet Seattle is generating significantly greater value. Seattle’s real per capita GDP is $75,960 vs. only $55,323 in Austin. Seattle’s per capita income is $61,021 vs. $51,014 in Austin.

    Austin had some good entrepreneurs like Michael Dell, but not superstars in industries that would create massive platforms like Microsoft and Amazon. Austin has a lot of quantity, but it looks to me like there’s a big quality gap vs. Seattle.

    And it’s not just that superstars create things, they act like a magnet attracting others. As economic development consultant Kevin Hively once told me, “When you’re the best in the world, people beat a path to your door.”

    To see this in action, just look at Carnegie Mellon University in Pittsburgh. CMU has the #1 ranked computer science program in the country. And companies like Google (600 employees), Uber (500 employees), Apple (500 employees), Intel, and Amazon been drawn there and set up shops around it. Ford is investing a billion dollars into autonomous vehicle ventures there. And GM also has a presence.

    It’s interesting to contrast with the University of Illinois’ program. U of I is ranked 5th in computer science. My impression is that from a commercial impact, they used to be bigger time than they are now. The web browser as we know it was invented there, but that was a long time ago. They have a research park designed for companies wanting to take advantage of proxmity of U of I. There are a lot of companies there, but the tech roster isn’t as marquee as Pittsburgh’s and my impression is that the scale is smaller.

    There’s a big differnce between being number one and number five, particularly when something like ownership of the driverless car market is at stake. Maybe that’s why former GE CEO Jack Welch said he only wanted to be in a business if he could be number one or number two.

    Cities and states in the Midwest and elsewhere in the interior like to boast of their assets, which include many great schools, but very few world dominating number ones in important fields. This is a big challenge for them.

    Superstars aren’t the entire world. The presence of superstar businesses also creates problems as well as wealth. But if these places want to not only thrive but perhaps for some of them even just survive in the knowledge economy world, they need to look at their attractiveness to the truly top tier talent (I will address “A” caliber but not superstar talent in a future post). I don’t often see this talked about.

    For example, one thing I don’t see in most discussion of Chicago is its lack of superstar talent. Chicago is very good but not the best in a lot of things. Where they do have arguably world beating talent, such as in their culinary industry, they shine. (I know people in New York who happily admit Chicago has better restaurants).

    If I were that city, I’d be looking to see how to create a world’s best talent pool in additional particular high impact industries. Maybe the state should consider some radical type action, such as relocating U of I’s entire computer science and select engineering programs to Chicago as part of UI Labs, and putting serious muscle behind getting at least some critical subspecialities with high commerical potential to be clear #1’s in the world.

    This is actually a scenario I plan to study in the future. Right now I’m not sure it’s necessary and some of my initial thoughts are impressionistic. So this post is in part a honeypot to try to lure in those who might react to this or even help flesh out the facts (which might augur against it).

    Regardless, this lack of superstar/number one type talent in the interior is a big handicap in the world we live in now. For example, just look back at a 2010 analysis Carl Wohlt did of where the people on Fast Company’s “100 Most Creative People in Business” list lived. Only six in the Midwest and seven in the South vs. 35 in the West and 32 in the Northeast (with 20 international). This isn’t a scientific survey but illustrates the scope of the problem.

    Cities and states need to take a more finer grained view of talent, and understand the criticality of having at least some of the absolute best talent to kicking a region’s knowledge economy into high gear. Too many places have a superstar gap.

    This piece originally appeared on Urbanophile.

    Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

    Photo by John Picken (Flickr: Chicago River ferry) [CC BY 2.0], via Wikimedia Commons

  • Where Manufacturing Is Thriving In The U.S.

    Throughout the dismal presidential campaign, the plight of America’s manufacturing sector played a central role. Yet despite all the concerns raised about factory jobs leaving the country, all but 18 of the country’s 70 largest metropolitan regions have seen an uptick in industrial employment since 2011. And despite the slowdown in car sales, the job count continues to expand, albeit more slowly. 

    Although the share of industrial jobs has shrunken from 10.5% of all nonfarm employment in 2005 to 8.5% today, manufacturing continues to have an outsized influence on regional economies, as is spelled out in the latest paper from the Center for Opportunity Urbanism. This stems in large part from the industrial sector’s productivity gains since 2001 –– almost twice as much as the economy-wide average,  according to the Bureau of Labor Statistics — and it has a far higher multiplier effect (the boost it provides to local job and wealth creation) than virtually any other sector. Manufacturing generates $1.40 in economic activity for every dollar put in, according to the U.S. Bureau of Economic Analysis, far greater than the multiplier generated by business services, information, retail trade or finance. 

    To determine the places where manufacturing growth is the strongest, we looked at employment in the sector over time, assessing short-, medium- and long-term trends going back to 2005 and adding in variables for persistence and momentum as well. The results of these trends, based on three-month averages, are normalized and each MSA is assigned a score based on its relative position in each area. (For a more detailed description of the methodology, click here.) The rankings this year produced some surprising results, as well as some familiar stories. 

    Gallery: The U.S. Cities Where Manufacturing is Thriving

    Red States And The Rust Belt Win

    Nine of this year’s top 10 regions for manufacturing job growth are in red states, led by top-ranked Louisville-Jefferson County, which straddles the border between Kentucky and Indiana. Since 2011, manufacturing employment in the metropolitan area has expanded 30.2% to a total of 83,300 jobs, led by a resurgent auto industry that accounts for 27,000 jobs in the area. Due to a slowdown in auto sales, the job count may be peaking, but the hub of the Bluegrass State has had a pretty good ride. 

    Louisville is no outlier in the old Rust Belt. Second-ranked Grand Rapids-Wyoming, Mich., has logged a 22% gain in industrial jobs over the same span, spread across a range of sectors including aerospace, advanced metals, automotive, office furniture and medical device manufacturing. In the longtime furniture-making center, 20% of jobs are in manufacturing, the highest proportion among the nation’s largest metro areas.  

    Our ranking features several other Midwestern cities on the industrial upswing: No. 4 Kansas City, Mo., No. 5 Warren-Troy-Farmington Hills, Mich., and No. 10 Detroit-Dearborn-Livonia. Taken together the latter two Michigan metro areas are now home to over 245,000 manufacturing jobs, up dramatically from the 205,500 manufacturing jobs they accounted for in 2011 and just below the 252,300 jobs they tallied a decade ago, before the Great Recession hit. 

    Among the other red state winners are Florida with third place West Palm Beach-Boca Raton-Delray Beach, where the industrial job count has grown 27.67% since 2011, in part from older industries such as food as well as technology, and No. 8 Orlando-Kissimmee-Sanford, where manufacturing growth is tied to the burgeoning aerospace sector. And then there’s the Beehive State’s economically buzzing capital of Salt Lake City in ninth place, where manufacturing job growth is spread along many industries, including aerospace, construction materials, metals and oil and gas-related manufacturing. 

    Blue State Surprises 

    Only one region outside the red states made it to the top 10: seventh-place Albany-Schenectady, N.Y. In a state and region that has been losing industrial jobs since the late 1960s, Albany has bucked the trend with a 17.6% gain in manufacturing jobs from 2011 to 2016 to to 25,800 positions. The area boasts factories that produce steam and gas turbines, computer chips and medical supplies — an impressive and diverse collection of cutting–edge industries. Meanwhile the industrial workforce in once-mighty New York City continues to whither. In 1950 the city had nearly a million manufacturing workers; now there are 74,100 after 4.7% shrinkage in 2016. New York ranks second to last in our survey among the 70 largest metro areas in the U.S. 

    Gallery: The 15 U.S. Cities Leading An Industrial Renaissance

     Even in heavily regulated California, which has been continuously shedding industrial jobs since 1988 (about 800,000 manufacturing jobs lost to date), some areas are showing surprising new strength. Take Oakland-Hayward-Berkeley, which has seen a 12.7% jump in industrial jobs to 89,600 since 2011, ranking it 13th on our list. The big player here appears to be Tesla, whose Fremont factory employs 6,500. The Fremont area has become something of a hotspot, with more than 900 manufacturing companies including AlterG and LAM Research. 

    Some believe it’s a byproduct of the Valley’s attempt to lay claim to “the Internet of things,” but other parts of the Bay Area are showing some signs of an industrial renaissance, including No. 18 San Francisco-Redwood City-South San Francisco and 22nd-ranked San Jose-Sunnyvale-Santa Clara. One big problem in some of these areas is attracting enough skilled workers given ultra-high housing prices. 

    Industrial Players In Decline 

    Many of the largest industrial areas are not doing so well. Houston, the nation’s third-largest manufacturing center, has seen industrial employment drop since 2011 by 5.49% to 220,900 jobs amid the skid in energy prices. Other oil patch economies have lost industrial jobs, including No. 57 Oklahoma City and No. 64 New Orleans-Metairie, La. Hopefully improved conditions for energy companies, particularly under President Trump, may improve prospects there as well. 

     It’s somewhat harder to find much hope for the nation’s two largest industrial regions. The Chicago-Arlington-Naperville region ranks 56th, having lost 1.85% of its industrial jobs since 2011, continuing decades of decline. Manufacturing in the City of Broad Shoulders has slumped from just under a million jobs in 1966 to 520,000 in 1990, 465,000 in 2000 and 281,000 today.  

    Even worse is the performance of Los Angeles-Glendale-Long Beach, which still has the most industrial jobs in the nation, some 356,000. Since 2011, the region has lost 3.47% of its industrial jobs, and 2.10% last year alone. On paper the L.A. region should be benefiting from hosting the headquarters of Elon Musk’s SpaceX and buzzy startups like Hyperloop and AIO Robotics. But whatever is being gained by way of these companies has been more than canceled out by downsizing, outsourcing and automation across the sector, as well as continuing losses in the aerospace and apparel industries. 

    Ultimately the future of high-cost metro areas like L.A. and the Bay Area may rest to a surprising extent on their ability to link up with cutting–edge tech industries. Elsewhere lower–cost regions should experience some continued growth as the current presidential administration seeks to encourage more on-shoring of basic production.

    This piece originally appeared on Forbes.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Dr. Michael Shires primary areas of teaching and research include state, regional and local policy; technology and democracy; higher education policy; strategic, political and organizational issues in public policy; and quantitative analysis. He often serves as a consultant to local and state government on issues related to finance, education policy and governance. Dr. Shires has been quoted as an expert in various publications including USA Today, Newsweek, The Economist, The Sacramento Bee, San Francisco Chronicle, and LA Times. He has also appeared as a guest commentator on CNN, KTLA and KCAL to name a few.

    Photo by Industrial Traffic.com, via Flickr, using CC License.

  • Las Vegas Lessons, Part 1

    I spent much of last week in Las Vegas for the International Council of Shopping Centers’ RECON 2017, the world’s largest real estate convention. It’s a gathering for developers, brokers, property owners, retailers, architects, landscape designers, construction companies, municipalities and more to get together to discuss real estate possibilities, in the one city that owes its very existence to aggressive real estate ventures.

    I had a good time, at least as much as I could; being there for a convention is far different from being there for pleasure. In fact, I’ve been to Vegas many times before, but always within a business context and never for pleasure. Also, I had not been in about 15 years, which is important for two reasons: 1) in Vegas time, with the rapid pace of development there, 15 years is an eternity; and 2) it completely predates the establishment of this blog, so I can include my thoughts on the city in this forum.

    In that vein, here’s a Corner Side Yard take on the Sin City — part urbanist, part sociologist, part economist, all observational — that details my thoughts on a truly unique place.

    The Strip and the city of Las Vegas are two entirely different entities. I think this subtle distinction, which few outsiders really know about, is key to understanding Las Vegas’ growth and development. Hal Rothman’s book Neon Metropolis, published in 2003, notes that the Las Vegas Valley grew in three distinct phases: the Union Pacific Railroad, the construction of Hoover Dam and military investment enter the picture prior to 1945; organized crime arrives and Nevada legalizes gambling, driving investment and perceptions through the 1960s; and the passage of two Corporate Gaming Acts in 1967 and 1969, which drew corporate investment into the area (partly as a means to dilute criminal investment). In that second phase, and continuing into the third, casino developers sought to avoid city development and permitting regulations by setting up outside of the city boundaries, which is at Sahara Avenue on Las Vegas Boulevard (aka the Strip). What most people recognize as Las Vegas is actually the unincorporated communiites of Winchester, Paradise and Spring Valley — significantly sized communities of their own, but under the jurisdiction of Clark County, Nevada. The county, which has two-thirds of Nevadans within its boundaries, takes a far more laissez-faire approach to development than the city of Las Vegas does, and directly reaps the benefits of development without having to pass through the city. That being said…

    The Strip is a great pedestrian experience. Anyone familiar with the Strip knows that a stroll of the roadway is an experience unto itself. From north to south, the Strip builds as a visual spectacle beginning at the Stratosphere toward Circus Circus and continuing to the Wynn and Encore, before reaching a crescendo at the intersection of the Strip with Flamingo Road, where the Bellagio, the Venetian, the Flamingo, Caesar’s Palace, Paris, and Planet Hollywood converge (see the picture above). The dense concentration of resorts continues southward past the MGM Grand to include the Tropicana, the Escalibur, the Luxor, and Mandalay Bay. Architects and urbanists Robert Venturi, Denise Scott Brown and Scott Izenour wrote of the Strip in their 1972 book Learning From Las Vegas, and one of their criticisms at the time was the isolation of the resorts via massive parking lots. If anything, the developers should be commended for revising their thinking on the Strip by creating the pedestrian environment. Yes, it’s gaudy, yes, it’s a jarring juxtaposition of architectural styles, but it does what so many other cities still fail to do — bring the experience right to the street. A great addition to the Strip is the usage of escalators and pedestrian bridges to minimize pedestrian interaction with the high-traffic Strip, serving a dual purpose as entrances into connected resorts. Which means…

    The Strip is an exclusively private space. It might be better to think of the Strip as the world’s largest mall, because its private management reminds me of enclosed shopping centers, writ very large. It’s clear that every inch of the Strip has been thought out as a way to collect and divert traffic into the resorts — the Monorail stops, the signage on the pedestrian walkways. If you’re looking dial down the Strip’s intensity through quiet public open spaces, you’re out of luck. The best you can do is find something inside one of the many resorts.

    Downtown Las Vegas is quite different from the Strip. Continue northward on Las Vegas Boulevard and eventually you will enter downtown Las Vegas. This is where the earliest hotels and casinos were established, the ones that drew visitors in by railroad as opposed to automobile. Resorts here are smaller and less overwhelming. It has a long-standing reputation for being a little more downscale, even seedier, than the Strip further south, but the city has worked hard to clean up its image and make it a fantastic destination in its own right. The Fremont Street Experience, an open-air pedestrian mall with a super-sized LED canopy display, unites several of the downtown casinos with an experience that’s completely different from the more well-known Strip. However, downtown Las Vegas probably maintains a secondary status in the Las Vegas Valley because…

    There are poor linkages between downtown Las Vegas and the Strip. The Fremont Street Experience in downtown Las Vegas sits about two miles north of the city’s southern boundary, where the Stratosphere hotel and casino are located. Downtown is about three miles north of where the real action and activity begins near the Wynn and Encore resorts. In between are the kinds of warehousing, light industrial, marginal commercial and grimy multifamily structures often found on the outskirts of downtown areas. There are wedding chapels, auto repair shops, convenience stores, and the like. There’s nothing that easily draws visitors between the Strip and downtown. Why?

    The north end of the Strip is plagued with high-profile failed projects. The Fountainbleau Resort Las Vegas and Echelon Place stand out as two high-profile casualties of the Great Recession, proposed just as the Strip was developing a continuous string of modern resorts that would reach from the Strip all the way into downtown. The Fountainbleau, a $2.8 billion project first proposed in 2005 with the second tallest structure in the Las Vegas Valley, managed to reach 70 percent completion before construction stopped in 2009 when the project went into bankruptcy. The $7.2 billion Echelon Place was announced in 2004, and the implosion of the Stardust Hotel and Casino, which it was to replace, happened in 2007. However, there were fits and starts in its construction due to the economy, until the developers sold the site in 2013. The new owners are proposing a new venture called Resorts World Las Vegas, but that project too has been plagued with delays. It’s clear that had these two projects been developed, they would have had a catalytic impact on further development northward toward downtown.

    That’s enough about the city and the Strip; I’ll follow up soon with more thoughts on the overall region’s built environment, economy and potential future.

    This piece originally appeared on The Corner Side Yard.

    Pete Saunders is a Detroit native who has worked as a public and private sector urban planner in the Chicago area for more than twenty years.  He is also the author of “The Corner Side Yard,” an urban planning blog that focuses on the redevelopment and revitalization of Rust Belt cities.

    Photo by Carol M. Highsmith [Public domain], via Wikimedia Commons

  • The Great Betrayal of Middle America

    America’s vast midsection, a region that has been hammered by globalists of both parties, has been abandoned by the great corporations that grew fat on its labor and resources.

    To many from the Appalachians to the Rockies, Donald Trump projected a beacon of hope. Despite the conventional wisdom among the well-heeled of the great coastal cities, these resource and manufacturing hubs elected the new president.

    Yet barely six months after his election, Trump is emerging as the latest politician to betray middle America.

    Some of this is his awful management and communications style, which may well leave the country frozen until it is returned to the care of the coastal hegemons, tech oligarchs, high-level bureaucrats, academics, and media elitists whose views of the Heartland range from indifferent to hostile. The rise of China may have been a convenient source of cheap labor and more recently investment capital and lots of full load tuitions for universities, but according to the left-leaning Economic Policy Institute, our deficit cost the country 3.4 million jobs, most in manufacturing.

    Trump’s trade rhetoric, like that of Bernie Sanders, excited the people and communities affected by these policies, but it remains questionable whether his own voters will benefit from his regime. Certainly the president’s tax proposals have been tailored to appeal to his billionaire friends more than the middle class. His health care reforms failed to prioritize those who feel threatened by loss of coverage, however much they gripe about the inanities of Obamacare.

    Meanwhile promises that could help middle-America, like a massive infrastructure program, appear to be roadkill squashed beneath Trump’s staggering ineptitude and his Republican Party’s dysfunction.

    There is no chance he will succeed in convincing voters he’s making America great again, let alone in actually doing so, if he cannot address the reasons why companies desert our towns and cities for all but elite functions, leaving so much of America in tatters.

    A Failed Peasant’s Revolt

    In its incoherence and lack of organization, Trump’s victory less resembled a modern social movement than a peasant’s revolt from the Middle Ages. His campaign lacked a coherent program, although its messenger, a New York narcissist, possessed a sixth sense that people “out there” were angry. Trump’s message was negative largely because he had nothing positive to say, though that had the useful effect of driving his enemies slightly insane.

    So while he’s succeeded in stirring the blue hornet’s nest, he’s created no productive movement. Successful social movements—the Jacksonians, the New Dealers, the Reaganites, and the European social democrats—directly appealed to the working class with policies that for better or worse, challenged the existing social and economic hierarchy.

    Trump, like Jackson, identified with the plight of the “left behind” America, notably rural areas and small towns that have seen their business communities shrink, while larger metropolitan areas have grown much faster. The new economic order, evident throughout the Obama era, represents what urban analyst Aaron Ren describes as “the decoupling of success in America. Those who are succeeding in America no longer need the overall prosperity of the country to personally do well. They can become enriched as a small, albeit sizable, minority.”

    Trump brilliantly played off this geographic and class segmentation. But unlike others who successfully played populist themes, Trump did not emerge from and understand the mindset of those further down the social order, as did Jackson, Lincoln, Truman, Reagan, Nixon, and Bill Clinton. Trump simply stoked resentments, many but not all well-justified.

    Trump has taken few concrete steps to address the causes of his supporters’ distress. Changes in trade negotiations and jawboning corporations are good first steps but limited in their effect. There is little in what he’s proposed since January that would help the middle and working class. Unlike Reagan, who cut rates across the board, Trump seems to be listening mostly to the Goldman Sachs grandees to whom he has entrusted our economy.

    In the end Trump’s modern-day peasants will be left stranded like the supporters of European peasant rebellions of the European middle ages, like England’s Jack Cade in the 15th century, or the Taiping rebels in mid-19th century China. These movements grew bright, stormed across the countryside, and conquered cities, until the forces or order imposed themselves and eliminated the most rebellious of their subjects. Hong Xiuquan, the leader of the Taiping, committed suicide in 1864, as the 14-year rebellion failed. Cade, of course, was killed, as recounted in Shakespeare’s Henry the 6th, still proud of his “unconquered soul” but nevertheless despised by the ruling classes.

    The Revenge of the Clerisy

    Trump, of course, won’t end up executed, but simply excommunicated from polite society. He will creep back to his Manhattan keep, surrounded by gold and glitter, celebrated by as many retainers as he can afford. The same, however, cannot be said for those who rallied to his cause in the thus-far unrealized hopes that we could protect them from the cognoscenti’s plans to refashion, and largely diminish, ordinary American’s daily lives and economic prospects.

    Trump’s faltering rebellion has been manna from heaven for the same swamp people—in both parties—who have been steering our democratic republic toward feudalism for a generation. Their ideology, notes author Michael Lind, sees themselves as a deserving meritocracy rather than a reflection of the persistence of social class.

    In the end, Trump may succeed in doing something that, a few months ago, would have seemed impossible. He has elevated the very people who concocted policies, from “free trade” to open borders to the wars of the Middle East and Obamacare, that alienated millions of Americans. He has woken up the entire apparatus, from the CIA and FBI to the State Department and the EPA, who now send their insider effluence to the remaining journalists who consider bringing down the president as the new crusade.

    It is not too much of an exaggeration that the media is now a fundamental part of progressive clerisy. According to the Center for Public Integrity, 96 percent of all media outlet donations went to Hillary Clinton last year. This process has been accelerated by the shift of media to an ever smaller, and ever more blue series of cities. More than half of all journalism jobs are now in cities which Clinton won by over 30 points; in 2008 they had less than a third.

    This may explain why celebrating and even being participants in the “deep state resistance”—which would seem to be contrary to traditional liberal views about popular sovereignty—has become a critical part of the media messaging. Yet, particularly after Trump, the clerisy no longer feels it needs to contain its contempt for the population. One does not have to be a Trump supporter to see the long-term dangers to democratic governance from over-empowered civil servants openly contemptuous of voters and the people they vote for.

    Over the next few years, Trump’s failure will elevate these “experts” who, in the anti-expert Trump, have found a perfect foil. Every time the president, or his minions, say something stupid (which is often), the talking heads and academics can harrumph about how the country should be run by Ph.D.s and J.D.s who, they feel, should direct rule on the unruly masses from above. To combat them, Trump lacks the eloquence of a Reagan, or the ferocity of a Jackson.

    Oligarchs Restored

    The notion of “Making America Great Again” had its flaws, but appealed to people who hoped to see middle-class jobs return to the country. It energized the suburbs and small cities who now find themselves led by an incompetent leader who appears to have used them, like patrons of a casino. Lured by an image of glamour they will find their wallets lightened rather than their spirits lifted.

    The big winners long-term as Trump fails to deliver will be the country’s emergent tech oligarchy. Allied with the clerisy, and with an expanding, soon to be dominant, role in the media, they will create the conditions and define the future culture. Hollywood and Wall Street will be partners, but the nerds of the Valley will rule the economy.

    To be sure automation and digitization brings many benefits, but Silicon Valley firms have secured advantage for reasons beyond being technically adept. Firms like Apple pay little in the way of taxes (thanks as much to Republicans as Democrats), and companies like Google manage to avoid anti-trust action. The rules are different for the oligarchs; they can afford to raise money without making a profit, as was the case of Amazon, Uber, and others. The shop on Main Street, or the store owner in the strip mall, enjoy no such advantage.

    It is almost impossible to overestimate the power of these corporations. Apple alone for example has more cash on hand than the total reserves of both the United Kingdom and Canada. Four of the world’s richest people come from either the Seattle or Silicon Valley tech community. More important for the future, techno-nerds account for the most of 23 American billionaires under 40; 12 live in San Francisco, the de facto blue capital, alone.

    The triumph of the oligarchs may spell the end of America as we have known it. Increasingly the core functions—and the big rewards—are concentrated in fewer hands and in fewer places. The distress being felt in rural areas and second-tier cities has its roots in globalization which, as Chicago sociologist Richard Longworth suggested two decades ago, undermines the industrial and routine business functions while boosting the already fantastic wealth of top echelon of executives, and those who serve them.

    To keep the voters and the people they vote for at bay, the oligarchs will make common cause with the social justice warriors (as we saw during the election) and the greens to confine and control the terms of our national conversation as they work to expand and enforce a neo-feudal order.

    The hoi polloi? They will get a stipend from the wealth generated by the oligarchs like Mark Zuckerberg. Likely not enough to start a business or own a home, but good enough to stave off homelessness or starvation. Silicon Valley and its media tools will forge a generation plugged into its phone but that owns little, and spends its limited capital on media, gadgets, and other idle pursuits. Americans will become more like a nature of serfs, their daily bread dependent on the kindness of their betters, their iPhone serving as both the new confessional and ephemeral town square.

    This is precisely the America that Trump’s supporters sought to prevent, but may soon be stuck with. Not because the middle and working class has failed, but because Trump, due to his dysfunctional ways and inborn class biases, has betrayed the very people who put him in office.

    This piece originally appeared on The Daily Beast.

    Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book is The Human City: Urbanism for the rest of us. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

    Photo by Jax House, via Flickr, using CC License.