New Geography

Category: Policy

  • The Silicon Valley Mindset

    The tech industry is one of the most powerful entities affecting our world. But who are these people? And what do they believe and how do they think about the world? A couple of recent articles provide a window into this.

    Rationalist Demographics

    The first is a set of demographics from the reader survey (unscientific, but with 5500 respondents) of the popular blog Slate Star Codex. SSC is the web site of Scott Alexander, pen name of a Midwest psychiatrist. It’s explicitly associated with the Rationalist movement and especially the Less Wrong community. If you’d like to get a feel for the Rationalist way of life, see the New York Times Magazine profile of them. One site says of them:

    …typical rationalist philosophical positions include reductionism, materialism, moral non-realism, utilitarianism, anti-deathism and transhumanism. Rationalists across all three groups tend to have high opinions of the Sequences and Slate Star Codex and cite both in arguments; rationalist discourse norms were shaped by How To Actually Change Your Mind and 37 Ways Words Can Be Wrong, among others.

    They analyze the world in terms of Bayesianism, game theory, trying to become aware of personal biases, etc. They are trying to improve themselves and the world through a clearer sense of reality as informed by their philosophical worldview above. Their heartland is Silicon Valley, though there’s a group of them NYC too of course.

    Alexander is a psychiatrist, but this community, and the Rationalists generally, is highly tech centric. Alexander himself is a defender of Silicon Valley. His readership is predominantly in computer science and other related tech professions, and overlaps heavily with Silicon Valley.

    His readers are 90% male, 89% white (Asians under-represented vs the Valley), and 81% atheist or agnostic. They skew significantly left in their politics. 55% of them are explicitly politically left, with another 24% libertarian. A higher percentage actually describe themselves as neoreactionary or alt-right (6.3%) than conservative (5.7%).

    The following table shows their responses on various topics:

    Item Left/Globalist Position Right/Populist Positions
    Immigration 55.8% more permissive 20.3% more restrictive
    Feminism 48.1% favorable 28.4% unfavorable
    Donald Trump 82.3% unfavorable 6.6% favorable
    Basic Income 60.1% favor 18.6% oppose
    Global Warming 72.8% requires action 13.7% does not require action
    Weightlifting 64.4% no/rarely 22.5% yes/often

    Silicon Valley Founders Survey

    A second source comes from a recent City Journal article by former Tech Crunch reporter Gregory Ferenstein. He used the Crunchbase database to survey 147 tech founders, including a few billionaires and other influentials, to get a sense of their belief system.

    One of his core findings is that Silicon Valley founders are strong believers in income inequality.

    The most common answer I received in Silicon Valley was this: over the (very) long run, an increasingly greater share of economic wealth will be generated by a smaller slice of very talented or original people. Everyone else will increasingly subsist on some combination of part-time entrepreneurial “gig work” and government aid. The way the Valley elite see it, everyone can try to be an entrepreneur; some small percentage will achieve wild success and create enough wealth that others can live comfortably. Many tech leaders appear optimistic that this type of economy will provide the vast majority of people with unprecedented prosperity and leisure, though no one quite knows when.

    The founders he surveyed (a tiny subset so beware of error margins) 2/3 believed that the top 10% of people would collect 50% or more of all the income in a meritocracy (the system they endorse).

    Y Combinator Paul Graham got in trouble for openly talking about inequality as inevitable. Not because other Valley execs thought he was wrong, but because the optics are bad. It’s similar to Uber CEO Travis Kalanick. His real crime was being so gauche as to put a picture of Ayn Rand as his Twitter avatar. He should have known that he was supposed to spout politically palatable bromides while running his company in a Rand-like mode, which seems to be how many of these firms in fact operate.

    Speaking of which, the politics of Silicon Valley are an odd mix of leftism and hyper-market economics. Overwhelmingly, Silicon Valley donates money to the Democrats and to progressive causes. (They also largely hate Donald Trump with a passion). What’s more, they have a communitarian streak and don’t think of themselves as hard core individualists:

    Indeed, in my survey, founders displayed a strong orientation toward collectivism. Fifty-nine percent believed in a health-care mandate, compared with just 21 percent of self-identified libertarians. They also believed that the government should coerce people into making wise personal decisions, such as whether to eat healthier foods. Sixty-two percent said that individual decisions had an impact on many other people, justifying government intervention.

    But they also support a neoliberal vision of the economy.

    Silicon Valley’s reputation as a haven for small-government activists isn’t entirely off base: the Valley does support some staunchly libertarian ideas, and the tech elite are not typical Democrats. They don’t like regulations or labor unions. For instance, Bill Gates and Mark Zuckerberg have both given hundreds of millions of dollars to charter schools and supported policies that would allow public schools to fire teachers more readily and dodge union membership. Big tech lobbyists are also strong supporters of free trade. According to Maplight, several telecommunications companies have lobbied for the Trans-Pacific Partnership (TPP) trade deal that union groups and many Democrats oppose.

    …

    Theirs is a move to make public schools more like charters—a different focus from a libertarian vision of simply privatizing the education system. The tech elite want to bring the essence of free markets to all things public and private. Using traditional American political categories, this would land them in the Republican camp.

    This is most evident in their techno-utopianism and belief that unbridled creative destruction always brings long run benefits:

    On the capitalistic side, tech founders were extraordinarily optimistic about the nature of change, especially the kind of unpredictable “creative destruction” associated with free markets. Philosophically, most tech founders believe that “change over the long run is inherently positive.” Or, as Hillary Clinton supporter and billionaire Reid Hoffman told me: “I tend to believe that most Silicon Valley people are very much long-term optimists. . . . Could we have a bad 20 years? Absolutely. But if you’re working toward progress, your future will be better than your present.”

    They in part reconcile all these through a belief in high taxation and redistribution, especially in the form of a basic income. This policy idea, nowhere fully implemented, is probably completely unknown to most Americans, yet has strong majority support in Silicon Valley (60% of SSC’s readers).

    The Silicon Valley State of Mind

    Combining these, what we see is that Silicon Valley is made up overwhelmingly of men, who are highly intelligent and with extreme faith in their intelligence and rationality, largely atheist, and largely leftist in their thinking, but who believe in an aristocracy of talent.

    They exhibit extreme faith in the goodness of technical progress and seem to believe that human problems can be resolved almost entirely through the realm of technology and engineering. They believe in policy, but a technocratic vision of it in which their rationalist designs, powered by technology, inform government decisions.

    One might say they are naive, but their track record of success gives them reasons for confidence. Consider Uber. Uber is effectively a technological workaround to dysfunctional politics and regulation. It has revolutionized transportation in many cities were taxis were before almost not available. Where almost all other reform efforts failed, Uber was a spectacular success. Apple, Google, Amazon, Facebook, etc. have all been extremely successful at what they do. And in any case, Silicon Valley’s “fail false” mentality means that they don’t necessarily see their failures – say, Mark Zuckerberg’s $100 million schools fiasco in Newark – as a reflection on their capabilities. Many failures and a handful of grand slams is how their system is designed to function.

    What’s more, it’s not just them who thinks they can fix things. Much of the rest of society seems to believe it too. For example, Alon Levy just put up a post examining the composition of NY Gov. Cuomo’s “MTA Genius Grant” panel, and how it is heavily slanted towards tech people vs. transportation people. Of course, the politicians and transport people have failed with the MTA to date. So they lose credibility by failures as Silicon Valley gains it with successes.

    However, their techno-optimistic view perhaps leads them to underestimate second and third order consequences and overestimate their ability to deal with them. For example, perhaps more than anyone else, Mark Zuckerberg and Jack Dorsey made Donald Trump’s presidency possible. Without his social media impact, and the ability of his troll army to drive news cycles, I very much doubt he would have gotten over the top. That’s a second order effect they never anticipated.

    Also, Trump himself is a classic example of creative destruction. He disrupted the politics business in the same way Netflix disrupted the video rental one. Yet they despise him and don’t think this is a positive change. It seems that they only like disruption when they are the ones controlling it, and don’t really believe in creative destruction per se. Instead it’s just another term of art for their taking over one industry after another.

    They themselves have no problem at all radically reordering society with unproven policies at levels far beyond what almost any political figure would do. Their blasé acceptance of massive job destruction and embrace of a speculative basic income scheme to compensate illustrate that. It’s no surprise to me that Mencius Moldbug, the founder of neoreaction (one of the sub-tribes commonly grouped with the alt-right that believes in absolute monarchy or the state as a publicly traded sovereign corporation), is a Silicon Valley techie and startup founder who reportedly started out in the Rationalist movement.

    They are also comfortable with an almost feudal distribution of wealth, so long as it’s based on an aristocracy of talent rather than heredity. And it’s an aristocracy that believes it should rule as well as profit. When they talk about a communitarian ethos in which the government needs to compel people to act properly, it’s pretty clear who the determinant of that is. It will of course be intelligent “rationalists” like them, who know what is right, have the technology to bring it into being, and whose motivations are beyond question (at least in their own mind).

    It’s a stunningly grandiose vision. Much like the EU, I suspect the public’s tolerance for it will be directly proportional to benefits continuously delivered. To the extent that Silicon Valley is able to deliver benefits to the common good, few will stand in their way. If the benefits slow, or the costs (including second and third order costs) start exceeding the benefits, we’ll see how it turns out for them.

    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 Maurizio Pesce via Flickr, using CC License.

  • Amtrak and Express Coach Lines: What’s Competition Have To Do With It?

    Express coach lines like BoltBus and Megabus have grown dramatically in recent years, providing millions of Americans with new mobility options. When the subject of competition between bus and train arises, however, many transportation wonks instantly become minimizers. Some cite growing rail traffic to make the case that this competition hardly matters. Others point to severe congestion on the Northeast Corridor (NEC)—Amtrak’s busiest route—to build the argument that attempting to lure passengers from buses to trains is a pointless exercise. Still, others note that trains are roomier and more comfortable than buses. This implies that the latter will forever be a last-resort option.

    There may be a grain of truth in some of these assertions, but the fact is that today’s travel market is increasingly cutthroat. Neither Amtrak nor bus lines can continue to expect robust growth of traffic merely by doing more of the same. The national average price of gasoline has, stubbornly, remained below $2.50 for more than two years, nullifying much of the advantage buses and trains had as relatively more fuel-efficient modes. The average round trip ticket price for airline trips fell to $361.20 in 2016, down almost $20 from 2015.

    In this tough environment, air and automobile travel has grown while bus and rail traffic has ebbed. After years of steady growth, Amtrak experienced a slight drop in passenger miles of traffic during its 2016 fiscal year, despite an improving economy. FirstGroup, owner of Greyhound, which operates the popular express coach line BoltBus, and Stagecoach Ltd., which owns Megabus, both experienced revenue drops from their North American operations during the 2016 fiscal year.

    That means the gloves are coming off in the fight for market share. Amtrak is experimenting with new pricing strategies and has added free Wi-Fi to most routes, matching the amenities of express coach lines. BoltBus and Megabus have also lowered fares and created apps allowing travelers to quickly change their reservations at only a nominal cost. Megabus has also rolled out reserved seating, allowing passengers to choose a specific seat – even one at a table – when booking to appeal to those wanting to work on their trip or who are concerned about a lack of comfort and privacy.

    Amtrak & Express Coaches – What’s Really Going On?

    Intrigued at the shifting contours of bus versus rail competition, I evaluated the competition between Amtrak and relatively new express coach lines. Five results stand out:

    1) On short- and medium-distance corridors with several daily trains, competition with Amtrak from express coach lines is fierce. Among the 4,854 miles of such corridors with more than one Amtrak train each day, almost three quarters (74%) have parallel express coach service, with Megabus easily the most pervasive. The entire NEC operation runs head-to-head against not only BoltBus and Megabus, but smaller lines like Go Buses as well. Every mile of the Pacific Northwest’s Cascade Corridor is traversed by BoltBus, while Amtrak’s busiest medium-distance corridors in the Carolinas and the Midwest are served by Megabus’ double-deckers.

    Click here for an enlarged map.

    By comparison, on long-distance routes and corridors having only one daily train, only about a third of mileage is subject to express coach competition. You will not find express coach lines paralleling any stretch of the Chicago – Los Angeles Southwest Chief route, yet every mile of the Crescent’s New York – New Orleans route is covered. Still, new bus lines are regularly popping up.

    2) The “sweet spot” for express bus lines are 125 – 300 mile routes, which allow for trips between 2.5 and 6 hours. Anything longer can seem insufferable in a bus, while shorter trips are often avoided due to many travelers’ desire to stay flexible. Plus, on short-hop routes, a large portion of the ride can be spent on traffic-clogged urban expressways, making travel times more unpredictable.

    This means than when trips are less than 125 miles, the train often wins. Both BoltBus and Megabus have withdrawn from the approximately 120 mile Los Angeles – San Diego route, and they provide scant competition on the Oakland – Sacramento “Capitol Corridor” and Chicago – Milwaukee “Hiawatha Corridor”, running no more than a pair of daily trips. Express coaches are more popular between New York – Philadelphia (90 miles) partially due to abnormally high train fares on this route, which often run four times the normal bus fare.

    3) Amtrak’s greatest advantage lies in serving intermediate stops. Another bright spot for Amtrak is that express coaches bypass many places generating extensive Amtrak business. Megabus, for example, runs express between Chicago and St. Louis (except for rest stops), while Amtrak calls on ten intermediate points, including Springfield, IL, the state capital. A similar pattern exists along other corridors.

    Express coach bus lines reach deeper in the NEC, serving not only Boston, New York, Philadelphia, Baltimore and Washington, D.C., but smaller points as well. Still, the railroad’s “string of pearls” network allows for direct trips between dozens of city combinations in a way not possible on express coaches, which tend to run direct to major hubs like New York.

    4) Express coach bus lines no longer operate predominately from Amtrak’s doorstep, which makes for a fairer fight. It may have once been true that express bus lines poached passengers eager to save a few bucks by leaving from curbs outside major train stations, but this is now rare. Almost two thirds of Megabus departures leave from points at least a half-mile away from the train. In New York, these buses now leave from about a mile away, on Manhattan’s west side. Only about a quarter of express coach departures operate from points a third-of-a-mile or less from Amtrak. This is the case in Boston and Washington, D.C., where dedicated bus terminals are connected to train stations.

    What’s more, development pressures and other urban issues are pushing the express coach lines to more remote spots. Earlier this year, for example, Megabus moved its loading zone to a location four blocks farther away from Chicago’s Union Station, where it had been located since its inception.

    Driving Up Demand

    Increasing demand over the next several years could take the sting out of the upsurge in competition. Oil prices are expected to inch up and the economy is improving. Moreover, working together could help give these modes a competitive edge in some circumstances. Buses can fill gaps in train schedules to provide better ground-travel options (while respecting federal rules limiting Amtrak’s involvement in the motor coach business). Intercity buses could more intensively feed Amtrak routes, as is done in California, who pioneered this approach, and Michigan, which has a similar strategy.

    But the bigger story is that bus-train competition has left the station and is speeding down the tracks. Expect bus lines to add new stops and continue to roll out amenities, while Amtrak works to boost frequency and speed, and grapple with its nemesis—delays—without the expectation of significant increases in federal funding over the short term. May the best mode win!

    Joseph Schwieterman, Ph.D., is professor of Public Services and director of the Chaddick Institute for Metropolitan Development at DePaul University in Chicago. He is the author of several books on railroads and a widely read annual report on the intercity bus industry.

    Photo by Chaddick Institute.

    June 2, 2017

  • Is California About to Clobber Local Control?

    The gradual decimation of local voice in planning has become accepted policy in Sacramento. The State Senate is now considering two dangerous bills, SB 35 and SB 167, that together severely curtail democratic control of housing.

    SB 35: Housing Accountability and Affordability Act (Wiener)

    SB 35, the brainchild of San Francisco State Senator Scott Wiener, would force cities that haven’t met all their state-mandated Regional Housing Need Allocations to give by-right approval to infill market-rate housing projects with as little as 10% officially affordable housing. 

    SB 35 is anti-free speech and civic engagement. No public hearings, no environmental review, no negotiation over community benefits. Just “ministerial,” i.e., over-the-counter- approval.

    SB 35 is pro-gentrification. As a statewide coalition of affordable housing advocacy organizations has written:

    Since almost no local jurisdiction in the State of California meets 100% of its market rate RHNA goal on a sustained basis, this bill essentially ensures by-right approval for market-rate projects simply by complying with a local inclusionary requirement [for affordable housing] or by building 10% affordable units.

    The practical result is that all market rate infill development in most every city in California will be eligible for by-right approval per this SB 35-proposed State law pre-emption.

    Berkeley Housing Commissioner Thomas Lord also has pointed out, the RHNA program itself is a pro-gentrification policy. It follows that passage of SB 35 would further inflate real estate values and worsen the displacement of economically vulnerable California residents.

    SB 35 is pro-traffic congestion. It would prohibit cities from requiring parking in a “streamlined development approved pursuant” to SB  35, located within a half-mile of public transit, in an architecturally and historically significant historic district, when on-street parking permits are required but not offered to the occupants of the project, and when there is a car share vehicle located within one block of the development. Other projects approved under the measure would be limited to one space per unit.

    Absent the provision of ample new public transit, the prohibition of parking in new development will worsen neighborhood traffic problems. SB 35 says nothing about new transit.

    The construction of on-site parking is expensive, up to $50,000 a space. A measure that exempts new development, as designated above, from including parking without requiring developers to transfer the savings to affordable housing is a giveaway to the real estate industry.

    Nor does SB 35 say anything about funding the amount of infrastructure and local services—fire and police, schools, parks—that would be required by the massive amount of development it mandates. Are local jurisdictions expected to foot the bill?

    The lineup of SB’s supporters and opponents reveals serious splits in the state’s environmental and affordable housing advocates. SB 35 has revealed serious splits among advocates for both environmental protection and affordable housing.

    Supporters include Bay Area Council, the lobby shop of the Bay Area’s biggest employers; BAC’s Silicon Valley counterpart, the Silicon Valley Leadership Group; the San Francisco and LA Chambers of Commerce; the Council of Infill Builders; several nonprofit housing organizations, including the Non-Profit Housing Association of Northern California and BRIDGE Housing; the Natural Resources Defense Council; the California League of Conservation Voters; and a panoply of YIMBY groups, including East Bay Forward and YIMBY Action.

    Opponents include the Sierra Club; the League of California Cities; the Council of Community Housing Organizations; the California Fire Chiefs Association; the Fire Districts Association of California; a handful of cities, including Hayward, Pasadena, and Santa Rosa; the Marin County Council of Mayors and Councilmembers; and many building trades organizations, including IBEW Locals 1245, 18, 465 and 551, and the Western States Council of Sheet Metal Workers.

    SB 167: Housing Accountability Act (Skinner)

    This bill, introduced by State Senator Nancy Skinner, who represents Berkeley and other East Bay cities, and sponsored by the Bay Area Renters Federation (BARF), is a companion to SB 35. It would prohibit cities from disapproving a housing project containing units affordable to very low-, low- or moderate-income renters, or conditioning the approval in a manner that renders the project financially infeasible, unless, among other things, the city has met or exceeded its share of regional housing needs for the relevant income category. (As of November 2016, HUD defined a moderate-income household of four people in Alameda County as one earning under $112,300 a year.)

    The bill defines a “feasible” project as one that is “capable of being accomplished in a successful manner within a reasonable period of time, taking into account economic environmental, social, and technological factors.” It does not define “successful” or “reasonable.”

    If a city does disapprove such a project, it is liable to a minimum fine of $1,000 per unit of the housing development project, plus punitive damages, if a court finds that the local jurisdiction acted in bad faith.

    SB 167 authorizes the project applicant, a person who would be eligible to apply for residency in the development or emergency shelter, or a housing organization, to sue the jurisdiction to enforce SB 167’s provisions. The bill defines a housing organization as

    a trade or industry group whose local members are primarily engaged in the construction or management of housing units or a nonprofit organization whose mission includes providing or advocating for increased access to housing for low-income households and have filed written or oral comments with the local agency prior to action on the housing development project [emphasis added].

    The highlighted passage was added to the existing Housing Accountability Act to encompass BARF’s legal arm, the California Renters Legal Advocacy and Education Fund (CaRLA), whose lawsuit of Lafayette recently failed. Last week CaRLA re-instituted its lawsuit of Berkeley over the city’s rejection of a project at 1310 Haskell.

    SB 167 further amends the existing Housing Accountability Act to entitle successful plaintiffs to “reasonable attorney’s fees and costs.”

    Predictably, the bill is supported by the Bay Area Council, the lobby shop for the region’s largest employers; the California Building Industry Association; the Terner Center at UC Berkeley; the San Francisco Housing Action Coalition; and YIMBY groups, including East Bay Forward, Abundant Housing LA, and of course CaRLA.

    Opponents include the California Association of Counties and the American Planning Association.

    If these bills—especially SB 35—become law, Californians will have lost a good deal of their right to a say the life and governance of the communities in which they live.

    This piece was first published in Berkeley Daily Planet and Marin Post.

    Zelda Bronstein, a journalist and a former chair of the Berkeley Planning Commission, writes about politics and culture in the Bay Area and beyond.

  • Rebuilding America’s Infrastructure

    President Trump promised a $1 trillion infrastructure plan during his campaign. Spending more money on infrastructure is something that has broad support among people of all political persuasions.

    But as the case of Louisville’s $2.4 billion bridge debacle shows, not all infrastructure spending is good spending.

    And as a judge’s ruling halting the Maryland Purple Line project to require more environmental study shows, many of our infrastructure problems have nothing to do with money.

    I tackle these problems and more in a major essay on the rebuilding America’s infrastructure in the new issue of American Affairs. Some key themes include:

    • America’s infrastructure needs are overwhelmingly for maintenance, not expansion.
    • Infrastructure means much more than surface transport (highways, transit), but includes underfunded items like dams and sewers.
    • There is a mismatch between funding structures and infrastructure needs that must be fixed.
    • Politics and regulatory barriers are often a greater problem than money, and until we improve this, progress on fixing infrastructure will be limited.
    • Private capital alone will not solve the funding challenge and comes with big problems of its own. There’s no such thing as free money.
    • An initial sketch of what an infrastructure program should look like.

    Here is an excerpt:

    Yet there clearly are major infrastructure repair needs in America. We have not been properly maintaining the assets we have built. Levee failures notoriously caused much of the flooding in New Orleans after Hurricane Katrina, but America has yet to address the neglect of its dam and levee systems. For example, the recent possibility of an overflow or collapse at the Oroville Dam in California forced 180,000 people to be evacuated. Many dams, levees, and locks on our inland waterway system are in need of repair, often at significant cost. Examples include Locks 52 and 53 on the Ohio River. Built in 1929, their replacement cost is $2.9 billion. As the New York Times reported, this replacement has been botched, and it was originally supposed to cost only $775 million—still a lot of money.

    Tens of billions of dollars are also needed simply to renovate America’s legacy transit infrastructure. The District of Columbia’s own Metro subway system has suffered several accidents that require emergency repairs to improve safety. It lost 14 percent of its riders last year, as they lost faith in the system. San Francisco’s BART rail system needs at least $10 billion in repairs. Boston’s transit system needs over $7 billion in repairs. New York’s subway signals still mostly rely on 1930s-era technology.

    Similar maintenance backlogs affect other infrastructure types. America’s older urban regions need to spend vast sums of money on sewer system environmental retrofit—$2.7 billion in Cleveland and $4.7 billion in Saint Louis. The state of Rhode Island had to pay $163 million to replace its Sakonnet River Bridge because it had failed to perform routine maintenance on the old one. This is just a sampling of America’s infrastructure gaps.

    But the poster child for American infrastructure problems is Flint, Michigan, where a water treatment error caused lead to leach into the water supply, rendering it unfit for human consumption. This caused then candidate Trump to say, “It used to be cars were made in Flint, and you couldn’t drink the water in Mexico. Now, the cars are made in Mexico and you can’t drink the water in Flint.” To be clear, Flint’s water crisis was caused by human error, but that was only possible because of the city’s old lead-pipe infrastructure. America’s water lines, in many cases, haven’t been touched since they were originally installed many decades ago. Some cities still have wooden water pipes in service. Syracuse mayor Stephanie Miner once said that if her city received the same $1 billion commitment from the state that Buffalo did, she would spend three quarters of it just to fix the city’s water lines.

    While things are not uniformly dire, it is clear that there is a need to repair and upgrade America’s existing infrastructure. It is this rebuilding, not building—making America’s infrastructure great again—that the Trump administration should focus on.

    Click through to read the whole thing.

    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.

    By Pi.1415926535 (Own work) [CC BY-SA 3.0], via Wikimedia Commons

  • Rail in Legacy Cities vs. Federal Funds to Poorer Markets

    Someone asked me to reconcile my recent paper on rail funding with my stance on Cal-Train electrification that the feds should prioritize funding towards poorer cities. Very good question because there is an apparent conflict there.

    My recent paper was positioned as a response to Trump’s plan to completely eliminate rail transit capital grants while retaining the basic structure of federal transport funding. I think these grants should be retained, but routed to repairs on the core legacy transit system which have a very strong rationale. (I might advocate a difference if we were talking about broader reform ideas like block grants to states or devolution).

    More broadly, my belief is that the creative class has gotten a lot of love over the last 15 years. That’s understandable since cities who don’t capture at least some high income earners to help pay the bills are in trouble. But a lot of cities are well past that point. It’s time to shift into harvest mode on that and refocus our efforts on lower income residents (and cities with significant poverty challenges).

    Hence I want to see federal infrastructure funding routed to items like sewer and water system repairs.

    For transit, I would like to see a federal focus on sustaining a high quality basic bus network in places like Detroit. So I do support prioritizing funds to these regions for plain old bus service.

    I do think wealthy regions like the Bay Area should pay for their own expansion projects because they generate significant value that can be captured to pay for it. Caltrain electrification makes sense to me as a project. This is one that you can make an argument about whether it’s really an updating of a legacy line vs an expansion. But in general, state of good service repairs should be prioritized, so this is not where I’d spend my federal money. (Though again, it’s not an objectively bad project).

    It’s the same in DC, NYC, etc. Federal funds should go to repairs rather than expansion. Some projects like the Second Ave. Subway make sense from a demand perspective, so it’s not ridiculous if the feds funded them. But my preference would be to use federal funding for maintenance, with expansion projects funded locally.

    The one expansion project of federal significance is the Gateway Tunnel, which service a major interstate regional rail corridor (although it also has local transit benefits).

    In short, to the extent that we keep the same basic federal system, send rail capital grants to legacy city repair (potentially including systems in older cities like Cleveland that have a line or two that might need repairs). Cities should pay for their own rail expansion projects (at least until we significantly reduce our critical repair backlog). The feds should look at bus funding to figure out how to create better basic bus networks, focused on cities with significant poverty and fiscal stress. At a minimum, make sure they’ve got decent quality buses, depots, etc. There may be a limit to what the feds can accomplish here, but that’s my general view of where the priority should be: repairs to existing mission critical rail lines and helping distressed communities.

    This article 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 Yuko Honda [CC BY-SA 2.0], via Wikimedia Commons

  • Cincinnati Streetcars’ “Catastrophic Failures”

    The Cincinnati streetcar–now known as the Cincinnati Bell Connector since Cincinnati Bell paid $3.4 million for naming rights–is barely six months old, and already is having problems. Four streetcars broke down in one day a few months ago.

    Now the company that is contracted to operate the streetcar has warned that poor quality control by the railcar maker has resulted in “catastrophic failures” of three different major systems that cause regular breakdowns of the vehicles. Cincinnati Bell is upset enough to demand possibly illegal secret meetings with the city council over the streetcar’s problems.

    Cincinnati once counted itself lucky that it didn’t order streetcars from United Streetcar, the short-lived company that made streetcars for Portland and Tucson, many of which suffered severe manufacturing defects. But it turns out the vehicles it ordered from a Spanish company named Construcciones y Auxiliar de Ferrocarriles (CAF), which were delivered 15 months late, weren’t much better.

    The streetcar is routed through, and is supposed to revitalize, Cincinnati’s Over-the-Rhine district, a former low-income neighborhood near downtown. But that neighborhood was already revitalizing long before the streetcar opened. No doubt someone will credit the revitalization to the streetcar, but in fact it was due to millions of dollars in taxpayer subsidies.

    Many of those subsidies come from tax-increment financing (TIF). Cincinnati has liberally created dozens of TIF districts (a state law limiting TIF districts to 300 acres forced the city to create two for Over-the-Rhine, which is districts 3 & 4). The city encourages developers to simply apply for funds, effectively allowing them to use the money they would have paid in property taxes to help finance their development.

    Naturally, developers love it. Just like the streetcar, however, TIF is a raw deal for taxpayers who end up having to pay higher taxes, or receive a lower level of urban services, in order to provide services to the TIF districts that should have been funded out of the taxes paid by property owners in that district.

    This piece first appeared on The Antiplanner.

    Randal O’Toole is a senior fellow with the Cato Institute specializing in land use and transportation policy. He has written several books demonstrating the futility of government planning. Prior to working for Cato, he taught environmental economics at Yale, UC Berkeley, and Utah State University.

    Photo by RickDikeman (Own work) [CC0], via Wikimedia Commons

  • The New American Heartland: Renewing the Middle Class by Revitalizing the Heartland

    This is the introduction to a new report written by Joel Kotkin and Michael Lind with a team of contributors. Download the full report (pdf) here.

    The greatest test America faces is whether it can foster the kind of growth that benefits and expands the middle class. To do so, the United States will need to meet three challenges: recover from the Great Recession, rebalance the American and international economies, and gain access to the global middle class for the future of American goods and services.

    The fulcrum for meeting these challenges is the combination of industries and resources concentrated in the New American Heartland, the center of the country’s productive economy. Traditionally, the Heartland has been defined as the agriculturally and industrially strong Midwest, alone or perhaps together with the Upper Plains. However, the geographic distribution of US manufacturing and energy extraction has expanded through the growth of new manufacturing zones, largely in Texas, the South and the Gulf Coast.

    Our map of the New American Heartland includes not only the Midwest and Upper Plains, but portions of all the Gulf States — Texas, Louisiana, Mississippi, Alabama, Florida — and the non-coastal southern states of Georgia, Tennessee, and Arkansas.

    It comprises most of the US between the Rocky Mountains and the Appalachians.

    The New Heartland incorporates the old Midwest and much of the South. Alongside it, the new continental periphery consists of the mountain and desert spine of North America from Mexico through to Canada, a region that is likely to remain thinly populated and devoted to resource extraction, tourism and wilderness preservation.

    While every region contributes to American prosperity, the New American Heartland has the potential to play an outsized role in powering economic growth in the twenty-first century.

    Download the full report (pdf) here.

  • The globalization debate is just beginning

    The decisive victory of Emmanuel Macron for president of France over Marine Le Pen is being widely hailed as a victory of good over evil, and an affirmation of open migration flows and globalization. Certainly, the defeat of the odious National Front should be considered good news, but the global conflict over trade and immigration has barely begun.

    On both sides of the Atlantic, there are now two distinct, utterly hostile, opposing views about globalization and multiculturalism. The world-wise policies of the former investment banker Macron play well in the Paris “bubble” — and its doppelgangers in New York, San Francisco, Tokyo and London — but not so much in the struggling industrial and rural hinterlands.

    The trade dilemma

    For much of the past half-century, the capitalist powers, led by the United States, favored free trade, even with terms often vastly unbalanced. Now President Donald Trump has undermined this orthodoxy. But anti-globalism transcends conservatism. Besides the National Front, which won over a third of the vote, doubling its support from 2002, the other rising political force in the country, far-left socialist Jean-Luc Melenchon, is at least as hostile to free trade. Much the same can be said of the ascendant Bernie Sanders wing of the Democratic Party.

    Globalists argue that the free trade regime, primarily promoted by the United States, has been a boon to the world economy. Certainly, the last half-century has seen enormous progress in some countries, most notably in East Asia, and led to a general decline in global poverty. It has also produced lower prices for consumers in America and elsewhere.

    Yet, there has been a price to pay, perhaps not in Newport Beach or Beverly Hills, but definitely in areas such as Lille, France, or Rust Belt Ohio, where workers and communities suffered for free trade “principles.” The trade deficit with China alone, notes the labor backer Economic Policy Institute, has cost the country some 3.4 million jobs between 2001 and 2015.

    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 Lorie Shaull from Washington, United States (French Election: Celebrations at The Louvre, Paris) [CC BY-SA 2.0], via Wikimedia Commons

  • California’s War on the Emerging Generation

    It should be the obligation of older citizens to try to improve the prospects for their successors. But, here in California, as seen in a new report issued by the Chapman Center for Demographics and Policy, we seem to have adopted an agenda designed to make things tougher for them.

    Millennials everywhere face many challenges. The U.S. Census Bureau estimates that, even when working full-time, they earn $2,000 less than the same age group made in 1980. Nationwide, a millennial with a college degree and college debt, according to a recent analysis of Federal Reserve data, earns about the same as someone of the baby boomer generation did at the same age without a degree.

    Generational crisis

    But California millennials face an even greater challenge than most. Despite the anecdotes of youthful fortunes emanating from Silicon Valley, California’s millennials, on average, do not earn more than their counterparts elsewhere. Yet, they confront the highest housing prices in the nation, now 230 percent of the national average.

    These prices hit the newest and youngest buyers hardest. California boomers have rates of homeownership close to the national average, but people aged 25 to 34 suffered the third-worst homeownership rate (25.3 percent) among the 50 states. In San Francisco, Los Angeles and San Diego, the 25-34 homeownership rates range from 19.6 percent to 22.6 percent — approximately 40 percent or more below the national average. That is no surprise here, given that in Los Angeles and the Bay Area a monthly mortgage takes, on average, are close to 40 percent of income, compared to 15 percent nationally.

    California’s young people are also staying with their parents more than their counterparts elsewhere. Overall, approximately 47 percent of 18-34s lived with parents or other relatives in 2015, according to the American Community Survey. In California, the figure was 54 percent.

    Long-term implications

    These soaring prices could have severe demographic consequences. For every two homebuyers who have come to the state, five homeowners left, the research firm Core Logic has found. If millennials continue their current rate of savings, notes one study, it would take them 28 years to qualify for a median-priced house in the San Francisco area, but only five years in Charlotte, N.C., or three years in Atlanta. A recent ULI report found that 74 percent of all Bay Area millennials are considering a move out of the region in the next five years.

    This exodus could accelerate over the next decade, as most millennials reach their 30s, marry, settle down, start families and consider a home purchase. We have already passed, in the words of USC demographer Dowell Myers, “peak urban millennial.”

    The future market demand for affordable single-family homes seems likely to continue expanding. Nationally, among home purchases made by those under 35, four-fifths choose single-family detached houses, a form that is increasingly out of reach. This is not due to preference. Indeed, according to a California Association of Realtors survey, 82 percent of millennial renters in the state believe that purchasing a home is a clever idea and a safe investment.

    Some assume that building more high-density housing will solve California’s severe housing affordability crisis. Unfortunately, construction costs for higher-density housing range up to 7.5 times the cost of building detached housing. Equally important, the clear majority of new households generally prefer single-family residences by a wide margin.

    Read the entire piece at The Orange County Register.

    Click here to see the video on millennial prospects in California.

    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 American Advisors Group, obtained via flickr using a CC License

  • The Springfield Strategy

    I just enjoyed an adventure in Springfield, Massachusetts with Steve Shultis and his wife Liz of Rational Urbanism. Steve does a far better job of describing his town and his philosophy than I ever could, but my interpretation can be summed up with an analogy about an old college room mate.

    At the end of my first year at university I was approached by an engineering student who asked if he could be my room mate next year. We didn’t know each other particularly well and didn’t have much in common, but he seemed harmless enough. I shrugged. Sure. We went our separate ways over the summer and in September he appeared at my door. After a few months of successfully sharing accommodations I asked him why he came to me when most guys in his situation would have gone in a very different direction. He explained.

    The average college freshman tends to have an adolescent understanding of what a good independent life might be like. Young men are motivated by peculiar impulses and the siren song of the frat house calls. Beer. Parties. Girls. Sports cars. The prestige of hanging out with rich kids, athletes, and really popular older guys. He said that was usually a big mistake. The furniture is made of plastic milk crates. The place smells like a locker room. People eat ramen and cold day old pizza out of the box. They wear flip flops in the shower because no one has ever cleaned the bathroom. Ever. And when you bring a girl home there are a dozen bigger richer guys with fancier cars than you hovering around. You sit there trying to get your romance on with posters of naked women taped to the walls next to a collection of empty bottles. And you pay extra for all this… It’s just not a great situation.

    Then he made a sweeping motion with his hand indicating our apartment. A pleasing mixture of antiques and modern pieces. Smells like lemons. When he brings a girl home I’m in the kitchen cooking brisket and home made bread. Soft lighting. Ella Fitzgerald is playing in the background. No competition. And it’s cheaper. For him, doing the unorthodox and socially uncomfortable thing was just… rational.

    Back to Springfield. Steve took a version of the same strategy. He and his family live in a gracious four story French Second Empire mansion. The place is huge and everywhere you look there’s a level of detail and quality you can’t find in any home built today. There’s a legal apartment on the lower level that they use as a guest suite.  I looked up the address on a real estate listing site and he paid less for this house than many people spend on their cars. His family has a quality of life and a degree of financial freedom that none of his suburban piers can comprehend.

    Most people load themselves up with massive amounts of debt in order to live the way they believe they’re supposed to. You wouldn’t want to put your kids in a substandard urban school with the wrong element. You wouldn’t want to buy a house that never appreciated in value. You wouldn’t want to have to explain to your friends, family, and co-workers that you live in a slum with poor black people and Puerto Ricans. And where do you park?! It’s so much “better” to soak yourself in debt to buy your way in to the thing you believe you can’t live without.

    A walk around the block brought us to the family doctor, numerous great places to eat, and one of the best little Italian grocery stores I’ve seen in years.

    A few more blocks and we arrived at the civic center, museum district, and numerous pubic parks. Like most older downtown areas Springfield experienced decades of depopulation and disinvestment with white flight to the suburbs and out migration to the sun belt. As the years passed and the economy shifted once again some downtowns boomed, but it was a winner-take-all scenario in Boston, New York, and San Francisco that hasn’t touched second and third tier towns farther afield. Springfield is half empty, but the full half is amazing and spectacularly affordable.

    If you’re looking for a large fully detached home with a yard Springfield has an abundance. These elegant homes are right on the edge of downtown within bicycle distance. This is an excellent alternative to suburban living for families with children who appreciate urban amenities. Homes like these close to Boston sell for millions. In Springfield they sell for pennies on the dollar.

    I like to poke around the ugly parts of town in search of hidden nuggets. The most interesting people tend to need two things: affordable property and a lightly regulated environment. It helps if absolutely no one with any authority cares about the location.

    Gasoline Alley is the old industrial corridor that supplies Springfield with fuel and associated services. More than a few of the older buildings are no longer viable for their original purposes. Lo and behold, the void is being filled with good music, food and drink.

    As much as I appreciate the “creative class’ and the importance of “third places” at the end of the day towns need to be productive before anything else can be supported. Local indoor food production is a viable business model in Springfield. It costs 56¢ to grow a head of lettuce hydroponically and it sells for $3. At first I questioned the level of electricity and other inputs associated with this kind of cultivation. Isn’t it just cheaper and easier to grow things in the ground with sunlight? Turns out… not so much most of the year in Massachusetts.  The alternative is bringing veggies in from California and Florida in refrigerated trucks. That involves far more energy and creates a critical dependency on systems locals have no control over. This particular entrepreneur can’t keep up with demand for his products.

    That takes me to another point that no one seems to be talking about these days. Towns like Springfield were once the economic engines of their day. They managed to engage in national and international trade while doing so in an intensely local manner. The primary resources used for commerce and industry were readily at hand: hydro power from rivers, wood from abundant forests, and minerals from local quarries. And raw materials and finished products were transported along the canal system using nothing more than a mule pulling a barge. If you’re looking for an environmental, renewable, durable, and resilient economic base you could do a lot worse than re-inhabiting the mothballed facilities in a place like Springfield.

    This piece first appeared on Granola Shotgun.

    John Sanphillippo lives in San Francisco and blogs about urbanism, adaptation, and resilience at granolashotgun.com. He’s a member of the Congress for New Urbanism, films videos for faircompanies.com, and is a regular contributor to Strongtowns.org. He earns his living by buying, renovating, and renting undervalued properties in places that have good long term prospects. He is a graduate of Rutgers University.