New Geography

Category: Policy

  • Will Anyone Stand Up for American Industry?

    “Esau for one morsel of meat sold his birthright. For ye know how that afterward, when he would have inherited the blessing, he was rejected: for he found no place of repentance, though he sought it carefully with tears.” – Hebrews 12:16-17

    Built from 1933-1936, the Bay Bridge linking San Francisco to Oakland was an engineering marvel of its day. A complex series of multiple spans, when it opened – six months ahead of the more famous Golden Gate Bridge – it was both the longest suspended bridge deck in the world and the longest cantilever bridge in the world. The western suspension bridge section, technically two bridges in one, had to settle for being only the second and third longest suspension bridges in the world.

    The 1989 Loma Prieta earthquake badly damaged the Bay Bridge. The iconic western suspension span was seismically reinforced, but the eastern steel truss section required replacement. San Francisco wanted another iconic span, not just a functional one. A striking self-anchored suspension structure was selected and is under construction.

    The dubious part of this new span isn’t the usual matter of being way late and massively over budget – though it is – but where it’s being made. The steel for the bridge is not being built in America but in China.

    Why is this bridge being fabricated in China? The troubling answer, according to a lengthy article in the SF Public Press, is that no American company can do the job. America, a country that once pulled off the most audacious of engineering projects with panache, one that put a man on the moon in the 1960s, now can’t even build a bridge to replace one it constructed with ease in the 1930s.

    What’s more disturbing, is that China can’t really build it either – but we are teaching them, and paying for them to learn how.

    When you drive across that new Bay Bridge, your tolls will literally be helping to finance the advancement of China’s industrial base and the evisceration of America’s.

    I believe in free trade, strongly. I believe America can compete in a free market. But the United States is a country curiously uncommitted to industry. Other countries build, promote and protect industrial champions. They blockade their markets against American competitors. India freely sells us software and BPO, but passes laws to hamper Wal-Mart and other American firms. China demands many foreign companies do business there only through joint ventures, and transfer technology to local partners. It also intervenes to keep its currency artificially low. Many countries outright ban foreign involvement in many sectors such as energy. They view even their privately owned firms, many of which have close and corrupt ties to the state, as instruments of national and foreign policy.

    These places see Japan as a model to follow, a country that used its closed market to build industrial champions, even in high technology markets. Perhaps in time the same problems that hobbled Japan – asset bubbles, debt, demographic collapse, or an inflexible economy – will similarly afflict these emerging markets. But by that time it might be too late for American industry. And those problems are just as likely to affect us as them.

    This raises difficult questions about the future of America. Can we thrive as a purely post-industrial economy? Can we have a long term prosperous society built on little more than selling each other ever more exotic pieces of financial paper, creative consultancies, typing away at computers, serving up caffe lattes, and the like? Can we have a just social order as a two-tier society of only highly-paid elite knowledge workers and a low end service class, but not the robust middle class a manufacturing economy – along with agriculture and energy – supported?

    Can America even retain its military industrial strength under such conditions? In the past, military technologies launched spin-offs to the commercial world. Today, the reverse is as likely to happen. Already the only major ship builders left in America are captive suppliers to the US Navy. Only the anomalous Jones Act has kept a tradition of small and medium sized commercial shipbuilding alive.

    There’s a positive reinforcement cycle at work. The less we manufacture, the less we can manufacture. We slowly lose the skills, the facilities, the institutions, and the culture that enable a robust manufacturing economy to thrive. Eventually, we won’t be able to recover.

    Maybe we won’t even want to. The less we make, the less we want to make. As we become unmoored from our agro-industrial roots, we fail to see them as central to our national identity and frequently treat them with hostility. As Douglas and Wildavsky put it in Risk and Culture (1982):

    A larger proportion of the population of working age was disengaged from the production process than had been before. The economic boom and educational boom together produced a cohort of articulate, critical people with no commitment to commerce and industry.

    Increasingly, Americans have no personal experience with industry, and even no family experience with it. What was once common is just another niche, much like military service has become. This means most people have little familiarity or affection for industry, agriculture, or energy production. Many, especially urban dwellers, view most productive industry as a negative, as a source of blight where once others saw jobs and a strong tax base.

    Portland provides the perfect example. It views its waterfront as prime territory for residences and recreation, but not for industry. As the Oregonian reports:

    The question makes Jay Zidell uncomfortable. When will he stop building barges on the waterfront and start building high-rises? The room goes silent….Oregon power brokers have nudged the Zidell family for decades to do more with their prime Portland real estate…In the 1970s, Gov. Tom McCall called Jay Zidell’s late father, Emery, to suggest he stop adding industrial buildings. As Jay Zidell has told the story, McCall said: “We have big plans for the waterfront.”

    Those big plans don’t include manufacturing. Portland is the perfect example of where America is heading. It’s a place where thousands of highly educated but often underemployed young people sip lattes by the light rail while on the waiting list for a job at Starbucks. Meanwhile people in third world countries, hungry for more, hustle to build an ambitious future for themselves and their nation. Americans increasingly view manufacturing as an undesirable activity, particularly in an urban context, when in fact we should be looking to build new industrial cities – updated, re-imagined, and re-designed for a 21st century economy.

    Also, too often industry is viewed only as a source of pollution. Many industrial expansions are opposed on environmental grounds. But from a global, not local perspective, an ever stricter regime of regulation is sending firms offshore where pollution standards are usually far laxer. Corporations put a green gloss on their branding campaigns while building their products in China, where they get electricity from one of the new coal fired power plants that open at a rate of more than one per week. They also escape independent unions, anything like the Environment Impact Statement process in the US, and operate in a regime of weak property rights, questionable worker health and safety conditions, and a limited ability for the public to dissent. It’s not just cheap labor, it’s regulatory arbitrage. It’s like inverse colonialism, only this time the joke’s on the West. And the end result is a global environment that ends up worse, not better.

    To really protect the environment, we should be doing more manufacturing at home, where we can keep an eye on it and prevent the worst abuses. It’s like the Steak ‘n Shake boast about their open kitchens: “In sight, it must be right”.

    The sometimes exception to this negative take on manufacturing is, of course, “green” industry, notwithstanding that the concept does not exist except as a transitory state. In a decade there will just be “manufacturing”, and virtually all will adhere to green standards. But if America can’t succeed at traditional manufacturing, why would anyone think it will be different with green manufacturing? Even if so, by then there might not be many major American producers left to succeed.

    American firms and labor have made many mistakes over the years, but more often today they are adopting the new approaches needed to compete in tomorrow’s world. American labor can compete, even against cheap foreign workers, since it is the best and most productive workforce in the world. But not when public policy implicitly favors shipping manufacturing overseas.

    The answer is not protectionism, it’s freeing American labor to compete and developing policies designed to advance American manufacturing interests. Alexis de Tocqueville talked about Americans knowing the difference between raw, naked self interest, and “self-interest well-understood”. Likewise, we need to find a new approach to create “free trade, well understood”, a modern day trade equivalent of speaking softly, but carrying a big stick. Billions for American infrastructure, but not one $4 Bay Bridge toll to finance China’s technology ambitions.

    Alas, this seems unlikely. American industry is trapped between a political right that can’t see beyond instinctive anti-federalism and an overly ideological vision of free trade, and a political left that, while paying lip service to labor interests, no longer embraces industry. Almost alone among nations, America today lacks political champions for its industry. That, more than anything, is why it is being left to wither. Will anyone stand up and be counted before it’s too late?

    Aaron M. Renn is an independent writer on urban affairs based in the Midwest. His writings appear at The Urbanophile.

  • The Limits Of Politics

    Reversing the general course of history, economics or demography is never easy, despite even the most dogged efforts of the best-connected political operatives working today.

    Since the 2006 elections – and even more so after 2008 – blue-state politicians have enjoyed a monopoly of power unprecedented in recent history. Hardcore blue staters control virtually every major Congressional committee, as well as the House Speakership and the White House. Yet they still have proved incapable of reversing the demographic and economic decline in the nation’s most “progressive” cities and states.

    Obama and his congressional allies have worked overtime in favor of urban blue-state constituencies in everything from transportation funding and energy policies to the Wall Street bailouts and massive transfers of private wealth to powerful public-employee unions. Yet these areas continue suffering from net outmigration and stubbornly high job losses – as well as from some of the most severe fiscal imbalances in the nation.

    Nowhere is this more evident than in the president’s hometown of Chicago. The Windy City has suffered a very bad recession and may have fallen to its worst relative position since the Daley reconquista in 1989. As Chicago blogger Steve Bartin points out, even the presence of a Daley operative in the White House has failed to prevent the city from falling “in a funk.” He writes that even a reliable booster, columnist Mary Schmich of the Chicago Tribune, has lately described the city “as edgy, a little sullen and scared, verging on depressed.”

    There’s plenty reason for feeling low, well beyond the humiliating loss of the Obama-backed Olympics bid last year. For example, Oprah Winfrey, the city’s one bona fide A-list celebrity, is retiring her talk show in 2011. She is also reportedly shifting much of her media empire to Southern California, which, for all its admitted problems, has gads of celebrities and much better weather.

    Chicago’s most serious concern, however, revolves around the economy. In June, its unemployment rate peaked at 11.3%, far outpacing the national unemployment rate of 10%. Since 2007, the region has lost more jobs than Detroit, and more than twice as many as New York. Chicago’s total loss over the entire decade is greater than any region outside Detroit: about 250,000 positions, which is about the amount its emerging mid-American rival Houston has gained. In hard times businesses tend to look for places with a friendly environment for their enterprise. They avoid high taxes, political payoffs and inflated public employee salaries – all well-known Chicago specialties. These costs are undermining the city’s competitive position in, for example, the convention business, among others.

    Other key sectors are also flailing. Political influence in Washington will not stem the flow of high-wage trading jobs away from the Mercantile Exchange to decentralized electronic exchanges. Nor can it reverse the deteriorating state fiscal crisis caused by weak economies and exacerbated by insanely high pensions and out of control spending policies. Late last month Moody’s and S&P downgraded the debt ranking for the State of Illinois. Of course, such fiscal malaise is not limited to Chicago or Illinois. True blue California has an even worse debt rating. New York, another blue bastion, is also just about out of cash.

    To be sure, the recession has not hurt New York as much as Chicago, but the Big Apple has lost heavily , including 50,000 financial sector jobs since 2007. The outrageous bonuses to a few well-placed financial types will cushion but not deflect the influence of declining high-wage jobs. This can be seen in the striking weakness in the once seemingly unstoppable high-end condominium market. Particularly hard hit have been recent gentrified neighborhoods like Williamsburg in Brooklyn, N.Y., much like the hard-hit, newly developed areas along the Chicago lakefront.

    Other blue bastions have been shedding jobs as well, both during the recession and over the whole decade. Beyond Chicago and Detroit, the biggest losses among the mega-regions have taken place in the San Francisco Bay Area, Los Angeles-Long Beach and Boston. Big money can still be made in Silicon Valley, Hollywood or around the academic economy of Boston, but in terms of overall jobs, the past decade has been dismal for these regions. Meanwhile, the consistent big gainers have been – besides Houston – Dallas and Washington, D.C., the one place money really does seem to grow on trees. Even Miami, Phoenix and San Bernardino-Riverside, in California, boast more jobs today than in 2000, despite significant setbacks in the recent recession.

    These trends coincide with continuing shifts in demographics. The recession may have slowed the pace of net migration, but the essential pattern has remained in place. People continue to leave places like New York, Chicago, San Francisco and Los Angeles for more affordable, economically viable regions like Houston, Dallas, Austin and San Antonio. Overall, the big winners in net migration have been predominately conservative states like Texas – with over 800,000 net new migrants – notes demographer Wendell Cox. In what Cox calls “the decade of the South,” 90% of all net migration went to southern states.

    Utah, Colorado and the Pacific Northwest have also experienced positive flows – but perhaps most striking have been the migration gains, albeit modest, in Great Plains states such as Oklahoma and South Dakota as well as Appalachian Kentucky and West Virginia. Historically these places shipped many of their people to cities of the industrial Midwest, the eastern seaboard and California; that is no longer the case.

    Ultimately these shifts could undermine the true blue political strategy, perhaps as early as the 2010 congressional and state elections, and certainly after reapportionment. By 2012, the census will likely take seats from New York, Michigan, Pennsylvania and Ohio, handing them over to Texas, North Carolina, Georgia and Utah. Perhaps nothing will epitomize the new reality more than the fact that California, now among the most extreme blue states in terms of governance, will not gain a Congressional seat for the first time since the 1860s.

    These trends suggest that the current administration and the majority party in Congress must adjust their strategy. Further attempts to push a radical “progressive” agenda – expansive public employee bailouts, higher taxes and radical measures to combat “climate change” and suburban development – might please their current core constituencies, but they have the perverse effect of driving even more people and jobs out of these regions.

    All these underlying trends appear a boon to Republicans. But Democrats could counter the emerging GOP edge by appealing to the needs of these ascendant regions. By their very nature, growth states have the most urgent need for government investments in basic infrastructure, something traditional Democrats long have espoused. Moreover, such areas tend to become more tolerant as they welcome outsiders, and could be turned off to excessive Republican social conservatism.

    For any of this to work, however, Democrats must first abandon their current narrow, urban-centric blue-state strategy. They must learn to adjust their appeal to regions on the upswing, or things could turn out very badly for them very soon.

    This article originally appeared at Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His next book, The Next Hundred Million: America in 2050, will be published by Penguin Press early next year.

  • Why New York City Needs a New Economic Strategy

    When Michael Bloomberg stood on the steps of City Hall last week to be sworn in for a third term as New York City’s mayor, he spoke in upbeat terms about the challenges ahead. The situation, however, is far more difficult than he portrays it. American financial power has shifted from New York to Washington, while global clout moves toward Singapore, Hong Kong, and Shanghai. Even if the local economy rebounds, the traditional media industries that employ many of Bloomberg’s influential constituents likely will continue to decline. New Yorkers have long had an outsize view of their city; historically, its mayors have touted mottos that encouraged that view, from Rudy Giuliani’s “capital of the world” to Mike Bloomberg’s “luxury city.” But as Bloomberg begins his new term, New York needs to reexamine its core economic strategy.

    A good first step would be to recognize that the world owes New York nothing. The city cannot simply rely on inertia and the disbursements of Wall Street megabonuses to save its economy. Instead, it needs to rebuild its middle-class neighborhoods and diversify toward a wide range of industries that can capitalize on the city’s unique advantages—including its appeal to immigrants; the port; and its leadership in design, culture, and high-end professional services.

    It’s also time to get rid of the Sex and the City image and start making New York a city where people can have both sex and children. This will become more important as the millennial generation enters its late 20s and early 30s later this decade. This is when many young migrants to the city, including upwardly mobile immigrants, typically become ex–New Yorkers.

    Despite all the “back to the city” hype, New York over the past decade suffered one of the highest rates of out-migration of any region in the country. Young singles may come to New York, but many leave as they get older and have families. An analysis by the city controller’s office in 2005 found that people leaving the city were three times more likely to have children than those arriving.

    If New York is to thrive, it will need to keep more of these largely middle-class families. To do that, it needs to diversify its economy beyond Wall Street, which in 2007 provided roughly 35 percent of all income earned in the city. Since the recession, the city has lost 40,000 financial-service jobs, but the industry has been quietly downsizing for years: over the past two decades, more than 100,000 financial-services jobs have disappeared from New York. In good years, financial services provided an enormous cash engine, but it can no longer provide enough jobs. According to an analysis by the Praxis Strategy Group, finance now accounts for barely one in eight jobs in New York City. Most job growth has come instead in lower-paying professions like health care and tourism.

    To become economically sustainable, New York needs to create policies that help encourage development in areas where its less wealthy citizens live. Most outsiders identify New York almost exclusively with Manhattan, yet roughly three out of four New Yorkers actually live in the outer boroughs: Queens, Brooklyn, Staten Island, and the Bronx. Neighborhoods like Bay Ridge, Whitestone, Flatbush, Howard Beach, and Middle Village are really New York’s middle-class bastions.

    Over the past decade, these communities have provided a critical middle ground between the bifurcated Bloombergian “luxury city” with its high-end enclaves and the many distressed neighborhoods throughout the city. Although the mayor, some urbanists, and many developers would like to make these middle-class enclaves ever denser, their very appeal often lies in their moderate scale, proximity to work areas, decent schools, and parks. Those attributes hold sway, even in a recession. “Brand- new and expensive places have not held up as well as the established family neighborhoods,” says Jonathan Bowles, director of the New York–based Center for an Urban Future.

    Nurturing these neighborhoods will require a distinct shift in public policy. During the Bloomberg years the big subsidies have gone to luxury condo megadevelopments, sports stadiums, or huge office complexes. Consider the 22-acre Atlantic Yards project in downtown Brooklyn, which will include luxury housing and a new arena for the NBA’s Nets; one recent report by the city’s Independent Budget Office put the total subsidies provided by the city, New York state, and the transit authority at $726 million and estimated the project will hurt, not help, the city’s economy over time.

    More than anything, the plain-vanilla neighborhoods that represent New York’s real future will require policies that create a broad array of economic opportunities. Right now New York is so overregulated and highly taxed that only the most high-end business, such as big media and financial firms, can possibly thrive. The city has neglected its smaller firms, typically engaged in such activities as food processing, furniture making, and garment production. Traditionally these industries were run by Russian, German, Polish, and Italian immigrants; West Indians, Latinos, Koreans, Chinese, and South Asians do much of this work today. Over the past decade, the number of self-employed immigrants in New York has grown even as the number of self-employed among the native-born has dropped.

    Earlier generations of urban residents as well as many immigrants today stay in the city to be close to their communities and industries dominated by them. These days many others stay in the city largely because of its cultural attributes and quality of life. This doesn’t mean these workers remain unreconstructed bohemians forever. Their priorities often change as they age, start businesses, and raise families. Different, more mundane issues—stable employment, taxes, safety, schools, and housing affordability—often determine whether they stay in the city. “It’s easy to name the things that attracted us—the neighbors, the moderate density,” says Nelson Ryland, a film editor with two children who works in his sprawling home in Brooklyn’s Flatbush neighborhood. “More than anything it’s the sense of the community. That’s the great thing that keeps people like us here.”

    Technology will boost this sense of community. Online groups like the Flatbush Family Network can facilitate contact in different parts of a city among artists, families, and neighborhood groups, supplementing the traditional community adhesives of schools, churches, synagogues, and clubs. These new online institutions can perform some of the functions that urbanist Jane Jacobs’s “eyes on the street” did in the old, cohesive city neighborhood. Information about the arrival of a promising new store or restaurant, or the unwelcome appearance of a possible child molester, travels through these community networks much as it did when mothers spoke over the washing, men went to the pool hall, or kids hung out at the candy store.

    Bloomberg has built on many of the achievements of his predecessor during his eight years in City Hall. This, combined with huge campaign spending from his personal fortune, is why voters sent him back for a third term. To position the city for prosperity in an economy that’s no longer overly dominated by Wall Street, he’d be wise to spend his final term focused on making new opportunities for people who live far from his own Upper East Side neighborhood—the people who represent the real future of New York.

    This article originally appeared at Newsweek.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His next book, The Next Hundred Million: America in 2050, will be published by Penguin Press early next year.

  • New Geography Top Stories of 2009

    As we bring to a close our first full calendar year at NewGeography.com, we thought readers may be interested in which articles out of more than 350 published enjoyed the widest readership. It’s been a solid year of growth for the site; visits to the site over the past six months have more than tripled over last year and subscribers have increased by a factor of six. The list of popular articles is based both on.readership online and via RSS.

    15. Joel Kotkin’s piece, Numbers Don’t Support Migration Exodus to “Cool Cities”, makes the case that places considered “cool” by many in media and economic development circles are actually losing net migrants to other U.S. regions. In almost every case, he argues, your local resources are better spent focused on skills upgrades for your local residents or hard and soft infrastructure upgrades for industries already successful in your region. This article originally appeared on Forbes.com

    14. The British Labour Party is no example for American Progressives. Legatum Institute Senior Fellow Ryan Streeter’s piece just in time for the 4th of July, View from the UK: The Progressive’s Dilemma, dissects Britain’s high social spending, increasing debt load. Streeter contends that the UK is danger of mortgaging its future.

    13. Breaking down Obama’s first year and looking forward. In two equally popular pieces from this fall, Joel Kotkin outlines a five point plan to improve Obama’s presidency (Obama Still Can Save His Presidency which originally appeared in Forbes.com. In the second piece he takes encouragement from signs that the President may be retuning his policy back towards America – “a big, amazingly diverse country with an expanding population” – and away from the “Scandinavian Consensus” model (Is Obama Separating from His Scandinavian Muse?) . This article originally appeared on Politico.com.

    12. State of the economy June 2009. Susanne Trimbath says it may be a while before the average citizen will actually see tangible improvements in the economy. As is often the case, Susanne’s predictions have turned out so far to be all too accurate.

    11. Questioning the stimulus plan. In February’sStimulus Plan Caters to the Privileged Public Sector, Joel Kotkin calls the stimulus plan “a massive bailout and expansion of the public-sector workforce as well as quasi-government workers in fields like health and education” yet “as little as 5% of the money is going toward making the country more productive in the longer run – toward such things as new roads, bridges, improved rail and significant new electrical generation.” This article originally appeared in Forbes.com

    10. Is California’s economic malaise leaking into Oregon? After years of strong migration flows of former Californians heading to Oregon, Joel Kotkin and California Lutheran University economist Bill Watkins point out that the state’s oppressive tax policies and red tape may be leaking into Oregon as well in California Disease: Oregon at Risk of Economic Malady. The article originally appeared in The Portland Oregonian.

    9. Tracking housing decline. Wendell Cox broke down the comparative national housing market in two widely read pieces. In the first he points out that the downturn can be broken into two phases, one mirroring the explosive growth in many overvalued markets, and another second phase were markets are declining across the board: Housing Downturn Moves Into Phase II. In the second, Wendell uses his median multiple calculation for the 49 largest metropolitan regions to show that prices in many place still have much farther to fall to reach historic norms: Housing Downturn Update: We May Have Reached Bottom, But Not Everywhere.

    8. Public debt is looming. Susanne Trimbath lists public debt levels of the most highly leveraged sovereign nations and explains why this debt and the credit default swaps purchased against it could create a looming public catastrophe: The Next Global Financial Crisis: Public Debt.

    7. Washington, DC is flourishing in the recession. NYU Professor and urban commentator Mitchell Moss explains how Washington is the one city benefiting from the government stimulus. He argues this is stimulating the DC economy, from increased lobbyist activity to web designers benefiting from the government’s new interest in digital communications: Washington, DC: The Real Winner in this Recession.

    6. Californa’s Decline. Three equally widely read pieces track the drastic shift in California from economic vibrancy to stagnancy: Kotkin’s “Death of the California Dream which ran first in Newsweek and The Decline of Los Angeles from February on Forbes.com. The third piece by economist Bill Watkins examines California’s domestic migration net losses using an old coal mining metaphor: In California, the Canary is Dead.

    5. Housing Affordability Rankings. The most read housing piece this year was Wendell Cox’s release of his annual housing affordability rankings based on median multiple calculations (ratio of median housing price to median household income in a given market). “Housing Prices Will Continue to Fall, Especially in California” lists median multiple calculations for each metropolitan region in the U.S. of more than 1,000,000 population.

    4. Detroit as a model for urban renewal. In a widely linked piece across the blogosphere, Aaron Renn points out that the decline in Detroit could be a platform for residents to get creative with urban re-development. This piece is full of stunning imagery of formerly dense neighborhoods now full of greenspace that sent me on a two hour Google Earth binge exploring the area. Detroit: Urban Laboratory and the New American Frontier.

    3. ”Alternative” Geography. New Geography publisher Delore Zimmerman’s run down of odd and quirky maps that redefine borders of the U.S. proved very popular on social bookmarking sites. “Borderline Reality”: “Sometimes maps can inspire and motivate us by helping to more fully understand the geography of our economic and demographic challenges and opportunities. Perhaps most importantly thematic maps tell a story about places.”

    2. Portland isn’t a model for every community. Easily our most widely discussed, shared, and linked piece this year was Aaron Renn’s “The White City.” The piece sparked a fair amount of criticism with some looking to poke holes in the racial breakdowns and others taking the piece as an affront to liberal politics instead of an examination of urban planning policy. Many of the most vehement critics failed to address the central point of the piece: Portland is a unique place with a unique disposition and composition, yet it is held up by many community leaders in other regions as the ultimate in public policy. Instead of holding up Portland as a model, cities and regions need to do a better job of looking at themselves and defining policy based upon local community identity. Be who you are.

    1. Best Cities Rankings. Overall, our most read content at New Geography this year was the Best Cities Rankings, released in April with Forbes. Our rankings are purposefully focused just on a combination of measures of one metric, employment change. We leave out all of the more qualitative measures thinking that all contribute to the output of a shifting employment landscape.

    Where are the Best Cities for Job Growth? (Summary Piece)
    2009 How We Pick the Best Cities for Job Growth
    All Cities Rankings – 2009 New Geography Best Cities for Job Growth

    It’s been a good year at New Geography, one of steady growth and, we believe, increased influence. We welcome your comments, participation, and submissions. Thanks for reading.

  • How California Went From Top of the Class to the Bottom

    California was once the world’s leading economy. People came here even during the depression and in the recession after World War II. In bad times, California’s economy provided a safe haven, hope, more opportunity than anywhere else. In good times, California was spectacular. Its economy was vibrant and growing. Opportunity was abundant. Housing was affordable. The state’s schools, K through Ph.D., were the envy of the world. A family could thrive for generations.

    Californians did big things back then. The Golden State built the world’s most productive agricultural sector. It built unprecedented highway systems. It built universities that nurtured technologies that have changed the way people interact and created entire new industries. It built a water system on a scale never before attempted. It built magnificent cities. California had the audacity to build a subway under San Francisco Bay, one of the world’s most active earthquake zones. The Golden State was a fount of opportunities.

    Things are different today.

    Today, California’s economy is not vibrant and growing. Housing is not affordable. There is little opportunity. Inequality is increasing. The state’s schools, including the once-mighty University of California, are declining. The agricultural sector is threatened by water shortages and regulation. Its aging, cracking, highways are unable to handle today’s demands. California’s power system is archaic and expensive. The entire state infrastructure is out of date, in decline, and unable to meet the demands of a 21st century economy.

    Indications of California’s decline are everywhere. California’s share of United States jobs peaked at 11.4 percent in 1990. Today, it is down to 10.9 percent. In this recession, California has been losing jobs at a faster pace than most of the United States. Domestic migration has been negative in 10 of the past 15 years. People are leaving California for places like Texas, places with opportunity and affordable family housing.

    California’s economy is declining. Those of us who live here can all see it. Yet, Californians don’t have the will to make the necessary changes. Like a punch-drunk fighter, sitting helpless in the corner, California is unable to answer the bell for a new round.

    Pat Brown’s California – between 1958 and 1966 – crafted the Master Plan for Higher Education, guaranteeing every Californian the right to a college education, a plan that has served the state very well. That system is threatened by today’s budget crisis and may be on the verge of a long-term secular decline. California was a state where people said yes, a state where businesses could be created, grow, and prosper. Some of these businesses were run by Democrats, others Republicans but all celebrated a culture of growth and achievement.

    Today’s California is a state where building a home requires charrettes with the neighbors, years in the planning department, architects, engineers, and environmental impact studies – we built the transcontinental railroad in three years, faster than a builder can get a building permit in many California communities. People here dream of a green future but plan and build nothing. There’s big talk about the future, but California now turns more and more of our children away from college, and too many of our least advantaged children don’t even make it through high school.

    Once, California was a political model of enlightened government. Now it’s a chaotic place where everyone has a veto on everything; a state where people say no; a state where business is wrapped up in bureaucracy and red tape; a state our children leave, searching for opportunity; a state with more of a past than a future.

    Some things have not changed. California’s physical endowment is still wonderful. The state is blessed with broad oak-studded valleys, incredible deserts, magnificent mountains, hundreds of miles of seashore, and an optimal climate. California’s location on the Pacific Rim situates the state to profit from growing international trade with the dynamic Asian economies. California didn’t change, Californians changed. Californians have forgotten basics that Pat Brown knew instinctively.

    How did California get to this point? How did it move from Pat Brown’s aspirational California to today’s sad-sack version? What did Pat Brown know in 1960 that Californians now forget?

    First thing: Pat Brown knew that quality of life begins with a job, opportunity, and an affordable home. Other Californians in Pat Brown’s time knew that too. His achievements weren’t his alone. They were California’s achievements.

    It seems that California has forgotten the fundamentals of quality of life. Instead, the state has embraced a cynical philosophy of consumption and denial. The state’s affluent citizens celebrate their enjoyment of California’s pleasures while denying access to those less fortunate, denying not only the ticket, but the opportunity to earn the ticket. At best California offers elaborate social services in place of opportunity.

    Today, too many Californians don’t rely on the local economy for their income. For them, quality of life has nothing to do with jobs, opportunity, or affordable homes. Many see the creation of new jobs as bad, something to be avoided. They see no virtue in opportunity. They have theirs, after all. It is their attitude that if someone else needs a job, let them go to Texas; if people are leaving California, so much the better.

    They see someone else’s opportunity as a threat to them. Perhaps the upstarts will want a house, which might obstruct their view. They see economic growth as a zero sum game. Someone wins. Someone loses.

    This type of thinking is unsustainable. Opportunity is not a zero sum game. It may be a cliché, but it is true, that if something is not growing it is dying. Many of the things that make California the place it is are not part of our natural endowment. The Yosemite Valley is part of the state’s natural endowment, but the Ahwahnee Hotel is not. Monterey, Santa Barbara, San Francisco, the wine countries, and California’s many other destinations were made possible and built because of economic growth. Will California add to this impressive list in the 21st century?

    Not likely. Today, we are not even maintaining our infrastructure. Infrastructure investment’s share of California’s budget has declined for decades. In Pat Brown’s day California often spent over 20 percent of its budget on capital items. Today, that number is less than seven percent. It shows.

    Pat Brown also knew that with California’s natural endowment, all he had to do was build the public infrastructure and welcome business, business will come. Too many today act as if they believe that business will come, even without the infrastructure or a welcoming business climate. Indeed, many Californians – particularly in the leadership in Sacramento – seem to think that business will come no matter how difficult or expensive the state makes doing business in California. This is just not true.

    California needs to embrace opportunity and economic growth. It is necessary if California is to achieve its potential. It is necessary if California is to avoid a stagnant future characterized by a bi-modal population of consuming haves and an underclass with little hope or opportunity and few choices, except to leave.

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

  • The Crisis Next Time: Public Finance

    The financial crisis of 2008 paved the way for the employment crisis of 2009, which has now paved the way for the upcoming public finance crisis of 2010. Most federal, state and municipal budgets are strained to the breaking point while the economy still has not found its footing. Meanwhile our national politics is obsessed with expensive overhauls of environmental policy and healthcare reform. Our latest policy strategy is an attempt to borrow and spend our way to prosperity, ala Japan of the past twenty years.

    It’s tempting to point to a few simple causes of these economic misfortunes, such as mortgage subsidies, loose credit standards, or excess financial leverage, but the truth is that we are experiencing the fallout of a failed policy paradigm.

    This paradigm was rooted in the past century with the creation of the Federal Reserve in 1913, the Employment Act of 1946 and the Humphrey-Hawkins Full Employment and Stabilization Act of 1978. It’s a paradigm dependent on many admittedly useful policy tools, including both Keynesian demand stimulus and the Austrian school’s theory of money and credit, the monetarism of Friedman, as well as the supply-siders of the 1980s.

    So, in what ways have these approaches failed?

    The policy goals are clearly stated: stable GDP growth and full employment. But the economic results have been decidedly mixed: the growth of real incomes laden with an exploding entitlement state, structural budget crises, widening wealth disparities, a catastrophe-prone banking system, and volatile asset markets. We’ve heard the term “systemic risk” bandied about the recent financial crisis, but this report card captures the true risks of the system we’ve created.

    Politically and socially, Americans clearly want a society where a growing middle class thrives, opportunity exists for individual success and advancement, and a prosperous elite accepts the responsibilities of power not to exploit the weak and disadvantaged. Instead, our political economy is hollowing out the middle class, creating more dependency among the poor, and fostering a culture of corruption and irresponsibility among the elites. Elsewhere I’ve characterized this current state of affairs as Casino Capitalism and Crapshoot Politics.

    Second question: why has our democratic politics failed to deliver? The short answer: Our government is doing too much of what it shouldn’t be doing and not enough of what it should.

    Free market economies are very good at producing wealth by harnessing the incentives of market participants. Market prices are valuable information signals that tell everyone how much of each good to produce. Governments, however, no matter how enlightened, cannot attain this efficiency. But, due to the political imperative to “do something” in response to countless demands, they feel compelled to try. Thus the focus on “growing the economy” and “creating jobs.”

    Unfortunately, these goals often demand incompatible policies, highlighting the differences between the private and public sectors. Private firms earn profits (i.e., create wealth) by increasing productivity, often by reducing labor costs. However, the public sector follows no profit criteria, so the government increases employment without attention to productivity. Thus, with more public sector jobs we create more employment while producing less. At the same time, the growth of the public sector empowers a politically powerful public union interest in its continued expansion. This is no way for a nation to grow rich.

    When we peel away the logic we find the true goal of public sector job creation: political redistribution of the economy’s wealth-creating capacity in order to mitigate the effects of markets. This is not an unworthy societal goal, but our public policies adopt counterproductive means to achieve it.

    To be fair, the political problem arises because private markets are agnostic towards the distributional effects of their success. Inequality, poverty, pollution, environmental degradation, the concentration of economic and political power – all these are unfavorable distributional effects of markets that give rise to political demands. The question is over how government should meet these demands.

    The 20th century attempt to tax and redistribute wealth has landed the modern welfare state in a cul-de-sac of exploding budgets, rising costs of living, slower economic growth and structural unemployment. We’re robbing Peter to pay Paul and neither – except for a relative handful of bureaucrats and rent-seeking capitalists – is better off for it. This adds up to less opportunity all around. Again, the problem is with our failed paradigm. We need to align our policies with behavioral incentives without surrendering our policy goals to an agnostic market mechanism.

    To construct a new paradigm we might do best to return to first principles of what Americans want: freedom, opportunity and justice. In order to enjoy these principles, citizens need to be empowered with choice, autonomy, and protection from unmanageable risks. Only functioning free and competitive markets can provide the necessary resources.

    So, what should be the proper role for government?

    The maldistribution of resources can be mitigated if citizens participate in the wealth creating process as more than an input labor cost. Public policy should cease deficit spending to promote employment and instead look to creating the necessary environment for private risk-taking, saving, investment, and production. This includes insuring market competition and mitigating the effects of economic risk and uncertainty. Tax and regulatory policies should promote the widespread accumulation, diversification, and access to capital to empower individuals and families with the necessary resources to build wealth and insure themselves against uncertainty. Where private insurance markets are incomplete, there is a role for limited social insurance to fill the gap.

    Numerous specific policies flow from this general paradigm shift, for example, we can stop penalizing savings through overly loose credit and onerous tax policies on interest and dividend income. There is no reason not to have a tax-free threshold for capital income that reflects the desired savings level of the median annual income household.

    Why have we stuck with a failed policy paradigm? Part of the answer is the Kuhnian nature of scientific revolutions, but the pursuit of power and influence by narrow interests is certainly a determinant factor. Economically and socially, we know where we need to go. Getting there politically is another matter. Our present political leadership (of both parties) certainly is not taking us in that direction.

    Michael Harrington is a policy analyst and writer with a multidisciplinary background in economics, finance and political science. His specialties are international capital markets, trade, and social insurance. He has taught political science at UCLA and conducted economic research for The Reason Foundation, The Milken Institute and the US Chamber of Commerce. His published writings and opinions have appeared in numerous business journals, including the Wall Street Journal, Barron’s, BusinessWeek, the Economist, the Christian Science Monitor and the Los Angeles Times.

  • Don’t Give Up On The U.S.

    If the U.S. were a stock, it would be trading at historic lows. The budget deficit is out of control, the economy is anemic and the political system is controlled by academic ideologues and Chicago hacks. Opposing them is a force largely comprised of know-nothings–to call them Neanderthals would be too complimentary.

    Not surprisingly, many Americans have become pessimistic. Two in three adults now fear their children will be worse off than they are. Nearly 40% think China will become the world’s dominant power in the next 20 years, as indicated by a recent survey.

    Yet, in spite of everything, I would still place my long-term bets on the U.S. Here’s why:

    1. The U.S. is the only advanced country in the world with viable demographics. By 2030, all our major rivals, save India, will be declining, with ever-larger numbers of retirees and a shrinking labor force. By 2050 Germany, Japan and South Korea could approach having twice as many people over 65 per capita as the U.S. By then, the U.S. will have 400 million people, which may be more than the entire EU and three times the population of our former archrival Russia.

    2. In terms of energy resources, the U.S., combined with Canada, is the second richest region in the world after the Middle East. The country possesses vast resources of natural gas, about 90 years’ worth, as well as strong areas for wind power. Given America’s past profligacy, the country could derive considerable savings with even modest conservation efforts.

    3. America remains the world’s agricultural superpower, with the most arable land on the planet. With another 3 billion people expected on the planet by 2050, the U.S. should enjoy a continuing boom in food exports.

    4. Military power matters now and in the future. We are not living in a Star Trek future of earthly harmony. The U.S. leads in military technology and, yes, our martial spirit remains a positive factor, despite the portrayals from Hollywood. For all its missteps, the U.S. military has achieved its strictly war-fighting missions–in Iraq and Afghanistan, as well as a host of smaller conflicts–over the past 20 years. Meanwhile, Europe and Japan have taken themselves out of the military game, and it will be decades before China will be ready for a head-to-head challenge.

    5. There is no large country that comes close to the U.S. as an entrepreneurial hotbed (Taiwan, Israel and Hong Kong come close but are far smaller). The recent Legatum Prosperity Index showed the U.S. remains by far the largest generator of new ideas and companies on the planet.

    Of course, all these critical advantages could be squandered by fecklessness. The empowered American left–in sharp contrast to the tradition that runs from Franklin Roosevelt and Harry Truman all the way to Bill Clinton–often envisions the U.S. as a country headed into the dustbin of history, and deservedly so.

    Leftist historian Immanuel Wallerstein, for example, asserts that the U.S. has been “a fading global power” since the 1970s. The only question now, he suggests, is “whether the United States can devise a way to descend gradually, with minimum damage to the world, and to itself.” Another leading liberal analyst, Parag Khanna, envisions a “shrunken” America that is lucky to eke out a meager existence between a “triumphant China” and a “retooled Europe.”

    The traditionally pro-American right increasingly shares this pessimism, albeit for different reasons. With Obama and the Democrats in power, many conservatives, including such keen observers as Charles Krauthammer and Victor Davis Hanson, believe the country has hit the historical skids.

    Yet declinism is often overstated. Today, only someone delusional would suggest that once widely feared Japan, soon to fall to third place (behind China) as an economic power, constitutes a serious threat to American preeminence. However, the fantasy of a European resurgence remains deeply embedded among American policy wonks and academics. It is a firmly held belief despite the continent’s decades of slow growth, demilitarization, disastrous demographics and mounting budget woes, particularly on its southern and eastern fringes.

    On the other hand, China and India represent true ascendant economies of the next decade and beyond. China’s rise has led one writer, the Guardian’s Martin Jacques, author of When China Rules the World, to suggest that America must “learn to bow” before the great power of the 21st century.

    Yet for all their impressive growth, neither China nor India possesses either the institutional strengths or natural resources of the U.S. China’s current boom has much to do with an orgy of money-printing that would make Barack Obama blush. Real estate in some places is turning bubblish. There are reports of vacancy rates as high as 50% in Shanghai’s commercial market.

    India, as anyone who has spent time there knows, remains a highly fragmented and largely impoverished country. It will be a great power of the future, but a very poor one, which will take many decades, even a century, to approach even a decent fraction of America’s current per capita income.

    Often overlooked as well is America’s unique advantage as an inclusive multiracial society. Over the past decade America has produced two African-American Secretaries of State and one President. America remains unique in its ability to absorb different races, religions and cultures, an increasingly critical factor in maintaining global preeminence.

    What Americans need most now is to develop policies that build on our essential strengths. Some tech enthusiasts and members of the Obama Administration claim that “the age of infrastructure is over.” However, in reality there is no way to assure a decent future for the next 100 million Americans without a major investment in everything from roads and broadband to transmission lines, water systems and basic skills training

    Some conservatives may oppose such a domestic surge, but the investment reflects a strong American tradition. The critical issue will be to make sure a commitment to infrastructure does not morph into a Washington-led industrial policy that would inevitably reward the well connected and stunt our innovative edge.

    In the end, Americans must remain true to our individualist traditions. Compared with Europeans, who instinctively look to government for guidance, the vast majority of Americans still believe that hard work is the key to self-improvement. Our primary economic asset continues to lie with entrepreneurial spirit and adaptability.

    In the coming decade, American success will require precisely this blend of public support and private initiative. If the U.S. stays true to its unique traditions, it will remain the world’s best investment for decades to come.

    This article originally appeared at Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His next book, The Next Hundred Million: America in 2050, will be published by Penguin Press early next year.

  • The Decade of the South: The New State Population Estimates

    Much has been made – particularly in the Northeastern press – of the slowing down of migration to the South and West as a result of the recession. But in many ways this has obfuscated the longer term realities that will continue to drive American demographics for the coming decade.

    Americans have been moving from the Northeast and Midwest to the West and South for decades (see US region map). In the first four decades after the Second World War, the warm, dry climates of coastal California were a significant factor. As the nation became more mobile – aided by such things as inexpensive air travel and the interstate highway system and the spread of air conditioning – the larger migration pattern went towards the South. There were, of course, other factors. Business costs, particularly the costs of labor, were often lower in the West and especially the South. Personal taxes in some states were lower than in the Northeast and Midwest. Surely the period from the end of World War II to 2000 could be called the demographic “half-century” of the West and South.

    The New State Census Estimates: The latest (July 1, 2009) Bureau of the Census release of state population estimates indicates a fundamental shift in migration patterns. Yes, even at recession-depressed rates, the Northeast and Midwest continue to export domestic migrants, but they are almost exclusively going to the South now, and not the West (See Table).

    Net Domestic Migration by State
    2009 Rank Net Domestic Migration Rank 2000-2009
    State 2009 2000-2009
    1 Texas    143,423       838,126 2
    2 North Carolina      59,108       663,892 4
    3 Washington      38,201       239,037 9
    4 Colorado      35,591       202,735 10
    5 South Carolina      31,480       306,045 7
    6 Georgia      26,604       550,369 5
    7 Tennessee      20,605       259,711 8
    8 Oklahoma      18,345         42,284 19
    9 Virginia      18,238       164,930 12
    10 Oregon      16,173       177,375 11
    11 Arizona      15,111       696,793 3
    12 Louisiana      14,647      (311,368) 45
    13 Alabama      11,044         87,199 14
    14 Utah        8,623         53,390 17
    15 Wyoming        7,192         22,883 25
    16 Kentucky        6,268         81,711 15
    17 Arkansas        5,298         75,163 16
    18 West Virginia        4,510         17,727 26
    19 District of Columbia        4,454        (39,814) 37
    20 Massachusetts        3,614      (274,722) 44
    21 New Mexico        3,366         26,383 24
    22 Delaware        2,580         45,424 18
    23 Montana        2,410         39,853 21
    24 South Dakota        1,619            7,182 27
    25 Idaho        1,555       110,279 13
    26 North Dakota        1,375        (18,071) 31
    27 Pennsylvania        1,346        (33,119) 34
    28 Alaska           979          (7,360) 29
    29 Missouri          (124)         41,278 20
    30 Nebraska          (956)        (39,275) 36
    31 Vermont          (975)          (1,505) 28
    32 Kansas       (1,242)        (67,762) 41
    33 Iowa       (2,135)        (49,589) 40
    34 New Hampshire       (2,602)         32,588 22
    35 Maine       (2,937)         29,260 23
    36 Nevada       (3,801)       361,512 6
    37 Hawaii       (5,298)        (29,022) 33
    38 Mississippi       (5,529)        (36,061) 35
    39 Wisconsin       (5,672)        (11,981) 30
    40 Rhode Island       (6,172)        (45,159) 38
    41 Indiana       (6,805)        (21,467) 32
    42 Connecticut       (7,824)        (94,376) 42
    43 Minnesota       (8,813)        (46,635) 39
    44 Maryland    (11,163)        (95,775) 43
    45 Florida    (31,179)    1,154,213 1
    46 New Jersey    (31,690)      (451,407) 47
    47 Ohio    (36,278)      (361,038) 46
    48 Illinois    (48,249)      (614,616) 49
    49 Michigan    (87,339)      (537,471) 48
    50 New York    (98,178)  (1,649,644) 51
    51 California    (98,798)  (1,490,105) 50
    Derived from US Bureau of the Census data.

    Moving to the South: Between 2000 and 2009, the South attracted 90% of domestic migrants from other states, with the West accounting for only 10% (see chart below). In 2001, the South attracted 71% of domestic migration but its share rose to 86% in 2002 and accounted for virtually all net migration by 2007. In that year, not only did the Northeast and Midwest lose domestic migrants, but also the West. By 2009, the South’s share of inbound domestic migration fell back to 94%.

    Throughout the decade, the small share of domestic migration that did not go to the South went to the West, while the Northeast and Midwest continued to lose residents. The 2000s are best characterized as the demographic “decade of the South” because the vast majority of Americans moving between states moved South.

    Nearly all states in the South gained domestic migrants during the decade. Only Mississippi, Maryland and Louisiana, along with the District of Columbia, lost domestic migrants. Even before Hurricanes Katrina and Rita, Louisiana was losing domestic migrants. Perhaps the big surprise is Florida, which has led the nation in domestic in-migration for years and has attracted 1.1 million from other states during the 2000s.

    Florida’s peak came in 2004 and 2005, when more than a net 260,000 domestic migrants moved to Florida from other states. Things have changed markedly, however, with Florida rapidly losing domestic migrants in 2008 and 2009, very likely due to the impact of the housing bubble and an overreliance on inbound retirees to drive its economy.

    However, Florida’s recent decline does not weaken the near-monopoly position of the South as the dominant destination of movers. Florida’s rapidly declining domestic migration has been largely replaced by a new domestic migration champion: Texas. In the early 2000s, Texas generally attracted from 30,000 to 50,000 net domestic migrants. Migration from Louisiana from Rita and Katrina propelled Texas to the top in 2006 and the state appears to have consolidated its position as the leader in domestic migration. In 2009, with domestic migration at more modest levels nationally, the Texas gain was more than any year except for 2006 with Hurricanes Katrina and Rita. But it’s not just a Lone Star story. Seven of the top ten states in domestic migration remained in the South in 2009. Throughout the entire decade, 6 of the top 10 states were from the South and 4 from the West. However, most of the gains in the West were simply from moving around (and from California); there was relatively little inter-regional domestic migration.

    Moving Around the West (and Away from California): Most states in the West have also gained domestic migrants in the 2000s, with the exceptions of Alaska, Hawaii and California. California is the real story in the West, having lost nearly 1.5 million domestic migrants, a population greater than that of the city of San Diego. In 2000, California lost nearly 100,000 domestic migrants and for the fourth year in a row led the nation in net domestic out-migration. This includes 2006, when not even Louisiana’s catastrophic hurricanes could drive as many people away as California. During the first year of the decade, California lost only 45,000 net domestic migrants. By 2007, as the center of the worldwide housing bubble, California’s losses were 7 times that amount. In 2009, even with depressed migration rates associated with the recession, out migration more than doubled between 2001 and 2009.

    California is simply not the draw that it used to be. There was a time, in the late 1930s, that the state tried to bar “Okies” from moving to the state, legislation wisely declared unconstitutional by the Supreme Court. Things have certainly changed. The latest Internal Revenue Service data indicates that every year during the 2000s, Oklahoma gained net domestic migrants from California.

    Outside California, there has been healthy domestic in-migration in the West. However, California’s losses cancelled out more than 80% of the West’s gains during the decade. Much of the movement within the region was internal, with Californians shifting to markets where housing was less expensive (but still expensive), such as Arizona, Nevada, Washington and Oregon. More recently the movement to the housing bubble ground zero states of Arizona and Nevada, have all but disappeared, with far smaller gains in Arizona and a small net loss in Nevada in 2009.

    In one year (2007), California lost more domestic migrants than all of the other states of the West gained. Domestic migration in the West remains largely about households moving around within the region: from California to other states, with a far smaller number arriving from elsewhere in the nation.

    Escape from New York (and the Northeast): Domestic migrants continue to leave the Northeast, just as they have for decades. In the Northeast, only New Hampshire and Maine gained domestic migrants in the 2000s. However, it was a bit different in 2009. Both New Hampshire and Maine lost, while Massachusetts and Pennsylvania gained.

    Pennsylvania has been the subject of more than one “what’s wrong with Pennsylvania” report as analysts inside and out decry its competitive position. In fact, by the ultimate measure of competitiveness, where people choose to move to or from, Pennsylvania has done relatively well in the 2000s. Pennsylvania’s modest loss of 33,000 domestic migrants pales by comparison to the net 2.5 million people who have moved away from neighboring New York, New Jersey, Maryland and Ohio. Like Texas, Georgia and many other states, Pennsylvania largely missed the housing bubble, which probably accounts for some of this surprising phenomenon.

    But the relative success of Pennsylvania should not be touted, as the mainstream media would tend to, as a sign of general Northeastern resurgence. New York alone lost 1.65 million over the 2000-2009 period. This is, in absolute numbers, more than California and a larger percentage loss than Louisiana with Katrina and Rita. Critically, data through 2008 shows that most of the domestic migration losses came from New York City and to a lesser extent its suburbs. Upstate New York, which also missed the housing bubble, experienced comparatively modest domestic migration losses, as Ed McMahon and I showed in an Empire Center policy report earlier this year.

    Hollowing out the Heartland: Domestic migrants are also deserting the Midwest, though in somewhat smaller numbers than in the Northeast. Only Missouri and South Dakota gained domestic migrants in the 2000s, although in 2009, Missouri experienced a small loss and was replaced by North Dakota as a gainer. But it is not a region-wide phenomena. Nearly 90% of the loss in the Midwest was in Illinois and the economic basket case states of Michigan and Ohio.

    Slowing Migration: One of the principal stories out of this year’s Census release is that interstate domestic migration declined markedly in 2009. Indeed, domestic migration was lower than in any other year in the decade, but not by that much. In 2009, 500,000 people migrated between the states, compared to between 570,000 and 620,000 annually from 2001 to 2003. Then, from 2003 to 2007, interstate domestic migration was up to 1.25 million and averaged more than 900,000. The anomaly is not so much that domestic migration is down, but rather that domestic migration got so high in the middle part of the decade, at the very same time that house price differences reached unprecedented heights. It’s no wonder people were moving.

    The Future? What comes next after the chaotic decade of the 2000s? As is suggested above, much of the variation in domestic migration is explained by differences housing prices and trends. Indeed, the price of housing may be a surrogate for the cost of living, which varies principally between areas based upon housing cost differences. This is likely to continue. In coastal California, house prices remained above historic norms, even at the largest “bubble burst” losses,” and there are recent indications that unhealthy price escalation has resumed. Much of the West and most of the country is far more affordable. This would suggest that coastal California’s domestic migration losses will continue and rise in the future.

    By contrast, in much of the rest of California and the other “ground zero” states of Florida, Arizona and Nevada house prices have returned to historic norms, which suggests that after the recession, strong domestic in-migration could resume.

    The future looks very bright for Texas and other states in the South that have done so well (such as North Carolina, South Carolina, Georgia, Tennessee, Oklahoma and even Arkansas). Their biggest challenge will be to resist the siren songs to become more like California, with its disastrous policies appreciated only by proponents and a fawning media.

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”

  • The Suburbs are Sexy

    The Administration’s Anti-Suburban Agenda: Nearly since inauguration, the Administration has embarked upon a campaign against suburban development, seeking to force most future urban development into far more dense areas. The President set the stage early, telling a Florida town hall meeting that the days of building “sprawl” (pejorative for “suburbanization”) forever were over. Further, a number of bills have been introduced in the Congress that would attempt to discourage suburban development, some under the moniker of “livability,” which promises to improve people’s lives by enforcing planner-preferred density. The war against the suburbs is by no means new, but the Administration and some members of Congress have proposed their own “surge” in hopes of suppressing them permanently.

    The Mythical “Demise” of the Suburbs: Nearly since the pace of suburbanization increased, following World War II, critics have been foretelling the demise of the suburbs. During the 1950s and 1960s, some planning “visionaries” such as Peter Blake were predicting widespread municipal bankruptcies in the suburbs and for residents. This was occurring even as other urban planners were tearing up cities with urban renewal projects and freeways, setting the stage for “block-busting” and an ever-widening racial divide. The early criticisms have been repeated through the years, justifying a paraphrase of the old saw about Brazil (“Brazil is the country of the future and always will be”): “The suburbs are the wasteland of tomorrow and always will be.”

    The Real Decline of the Cities: In fact, it has more generally been the central cities that nearly went bankrupt, not the suburbs. Examples include New York, Philadelphia, Pittsburgh, Cleveland and that jewel of municipal consolidation, Indianapolis, rescued last year by $1 billion in state taxpayer funds. There are hopeful signs of a renaissance in most central cities, however their financial difficulties remain intractable and large swaths of their land area remain desolate. Meanwhile, the lawns were mowed in the suburbs, the houses painted and a strong sense of community developed among residents that was far too subtle for the prophets of suburban doom to perceive.

    Greenhouse Gas Emissions: More recently, the effort to reduce greenhouse gas (GHG) emissions has given suburban critics new ammunition. A simple mantra was dictated by “planning common sense.” Cars produce greenhouse gases, therefore people must get out of cars and live in more dense conditions, where they will not need to drive as much. Further, they will live in smaller, multi-family dwellings, which planning common sense teaches are more GHG friendly than the despised – except by those who choose to live in them – detached housing in the suburbs.

    But a funny thing happened on the way toward GHG inspired desurburbanization. Some academics actually began looking at data. The reality of the suburbs turned out to be rather different from that portrayed by the conventional wisdom of the planners. The most comprehensive research comes from Australia, some of which has been previously covered here.

    University of South Australia: The most recent (and new) offering comes from a University of South Australia report thatallocates transportation and residential energy produced GHGs by location and housing type in the Adelaide area. The researchers found that the most GHG friendly sector of the urban area was the inner suburbs, which are dominated by single-family attached housing. GHG emissions per capita from housing and transportation were estimated at 7.0 metric tons of GHG emissions per capita annually.

    However, the outer suburbs, principally with detached housing, were not far behind at 7.4 tons GHG emissions per capita. The highest GHG emissions per capita, by far, were in the central area, with its predominance of multi-unit housing. There the annual GHG emissions were estimated at 10.0 tons per capita (See Figure). The University of South Australia study includes an element missing from virtually all other examinations of transportation and residential GHG emissions: “embodied emissions.” Embodied emissions are the GHGs from construction or manufacturing materials, and from building cars, transit vehicles and buildings. Embodied GHG emissions are ignored by much research, but are a significant factor in GHG emissions. For example, multi-unit housing, with higher use of concrete and more complex construction methods, tends to be substantially more GHG intensive than building detached housing or townhouses.

    GHGs from Common Energy: Previous work by Sydney researchers reached similar results – townhouse development was the most GHG friendly, followed closely by detached housing. Both were substantially less GHG intensive than high-rise condominium development. A principal reason for this conclusion stems in part from the fact that this research included GHGs from common energy, such as the electricity used to power elevators, parking lot and common area lighting, building-provided heating, air conditioning and water heating. American and Canadian research attempting to quantify GHG emissions by residential building type generally has not accounted for common energy and its GHG emission. Yet a gram of GHG from a residential elevator has the same impact as one produced by driving to the local Target store.

    GHG Friendly Suburbs: The most comprehensive research was conducted by the Australian Conservation Foundation. This was not the typical, incomplete or theoretical study of greenhouse gas emissions. The study included virtually every gram of greenhouse gas emissions in Australia and allocated them to consuming households in small residential zones within urban areas and around the nation. Suburban locations, with their greater use of cars and higher percentage of low density detached housing, had lower GHG emissions per capita than the core areas, with their greater use of transit and walking and their high-rise multi-unit housing.

    Compact Development: These findings provided the impetus to review the potential impact of compact development policies. Compact development policies (also called “smart growth” or “growth management”) generally seek to densify urban areas, by drawing urban growth boundaries, outside of which development is prohibited, and by trying to force people to drive less and to use transit more. Again, “planning common sense” clearly indicated to planners that compact development would yield substantial benefits in GHG emissions, principally because people would drive less.

    Yet the more recent research on compact development finds something much different. Densification scenarios from two recent reports, the congressionally mandated Driving and the Built Environment and a smart growth coalition’s Moving Cooler, showed that by 2050, compact development could reduce GHG emissions from driving by only 1% to 9%. At the high end of the range, the most new development would be directed to only a small part of present urban footprints, a policy outcome less believable than a balanced federal budget next year.

    Moreover, these projections have to be considered overly optimistic, because they make no allowance for the higher GHG emissions that occur as traffic slows and stops more in higher density conditions.

    The President Discovers the Suburbs? Meanwhile, on December 15, President Obama took the opportunity to visit a suburban Washington Home Depot, a chain that is a very symbol of American suburbanization. The President could have taken the opportunity to orate further against the suburbs in the insulation aisle, urging households to abandon the suburbs and move to high rise condominiums in the city.

    That was not to be. The President instead proposed providing incentives to people to make their houses more energy efficient, which would reduce greenhouse gas emissions and save money on consumer energy bills. In particular, he cited insulation, saying that “insulation is sexy”. It is worth noting that the Home Depot’s insulation is principally sold to suburban homeowners who can readily arrange for its installation. Residents of high-rise condominiums must rely on their building managers, who tend to purchase their insulation from wholesalers, rather than retailers like Home Depot and Lowes.

    The President explained why insulation was sexy, noting that saving money is sexy. Indeed, saving money is what the suburbs are about. The economic research is clear that housing costs are far less where suburban development is not limited by the compact development strategies that artificially create land scarcity. That’s why places like Dallas-Fort Worth, Atlanta and Houston, without compact development, had little, if any housing bubble, while housing bubbles of economy-wrecking proportions occurred in California and Florida, with their compact development.

    Yes, Mr. President, insulation is sexy. Saving money is sexy. And, the suburbs are sexy.

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”

  • The Green Movement’s People Problem

    The once unstoppable green machine lost its mojo at the Climate Change Conference in Copenhagen. After all its laboring and cajoling, the movement at the end resembled not a powerful juggernaut but a forlorn lover wondering why his date never showed up.

    One problem is that the people of earth and their representatives don’t much fancy the notion of a centrally dictated, slow-growth world. They proved unwilling to abandon either national interest or material aspirations for promises of a greener world.

    The other problem is that divisions are now developing within the green camp. There are members, like Michael Shellenger and Ted Nordhaus, who recognize the serious fall out from the “Climategate” scandal, while others, including large parts of the media claque, dismiss any such possibility. There are the corporatists aligned with big business–who will live with any agreement that allows them to exact monopoly profits–and the zealots–like Greenpeace, Friends of the Earth and Bill McKibben–who see Copenhagen as an affront to themselves and to our endangered planet.

    But the main, fundamental problem facing the movement after Copenhagen–which none of the green factions have yet addressed–is its people problem. The movement needs to break with the deep-seated misanthropy that dominates green politics and has brought it to this woeful state. Its leaders have defined our species as everything from a “cancer” to the “AIDs of the earth.” They wail in horror at the thought that by the year 2050 there will likely be another 2 or 3 billion of these inconvenient bipeds. Leading green figures such as Britain’s Jonathan Porritt, Richard Attenborough and Lester Brown even consider baby-making a grievous carbon crime–especially, notes Australian activist Robert Short, in those “highly consumptive, greenhouse-producing nations.”

    Yet a slower population growth–while beneficial for poor, developing countries–can lead to a dismal, geriatric future in already low-birthrate nations like Germany, Italy, Spain, Japan, South Korea and Russia. And although birth rates are dropping in most developing countries, particularly those experiencing rapid economic growth, it will likely be decades before population stops increasing in most of the developing world.

    Besides, people in developing countries have much more important things to worry about–such as earning a living and getting ahead. Fighting climate change ranks low on the list of Third World priorities. The sprawling slums of Mumbai need more energy, not less; they want better roads, not fewer. More economic development would produce the money to help clean the now foul water and air, but also provide access to better education, one of the best ways to assure more manageable birth rates.

    Instead of looking to make developing countries even more dependent on Western largesse, greens should focus on ways to help improve the day-to-day lives of their people. Rather than prattle on about the coming apocalypse, they could work to replace treeless, dense slums with shaded low-lying clean houses that are easier to heat or cool. Those interested in nature might purchase land and rebuild natural areas. The children of cities like Mumbai should have the opportunity to experience wildlife other than crows, pigeons and rats.

    The environmental movement also might as well forget fighting the aspirations of the burgeoning middle class in India, or other developing countries. No developing world politician, whether from democratic India or Brazil or authoritarian China will embrace an agenda that stifles such aspirations.

    Post-Copenhagen greens need to reassess their relations with people in the developed countries as well. The popular call to transfer hundreds of billions of dollars from the so-called “rich” countries to combat the potential effects of climate change will not be very popular with the vast majority of the middle or working classes in these places.

    Much of the problem revolves around the loaded term “rich.” To be sure, many top climate-change scolds–Richard Branson, Al Gore, Arnold Schwarzenegger, Michael Bloomberg and, of course, his royal highness, Prince Charles–qualify easily. After all, no sweat off their well-massaged backs. The rock stars of the green millennium can buy their environmental indulgences so they can gorge good conscience on their carbon-rich world of private jets and lush estates.

    For them, going green means minimal sacrifice.

    Instead, the “rich” who will suffer the most will be the middle and working class of the developed countries. For them, carbon “sacrifice” may mean more than giving up needless luxuries like gas-guzzlers or monster plasma televisions. A green regime of enforced slow growth and ever greater regulation over carbon could threaten whole industries while environmental-planning policies will make purchasing a decent suburban house even more difficult.

    Such calls for sacrifice seem particularly ill-timed when 4 in 10 U.S. residents fear they could lose their jobs, with many rightly worried about holding onto their homes. With unemployment at 10%, few may be willing to wait around until the promised “green jobs” miraculously appear to save both them and the planet.

    But there’s an obvious way out of this dilemma: Start shifting away from fear-mongering and look to ways to achieve green goals without catastrophic economic losses. One clear way to start this process is through land-use policy. Right now many activists and their allies in the climate-industrial complex–which includes urban land interests–want to force suburban home dwellers into dense urban areas. They also want to coerce people to give up their individual mobility for trains, even if this means longer commutes and less convenience.

    Proposing a radical re-engineering of society does not constitute a winning political program. Environmentalists would do better to embrace a vision of “greenurbia,” allowing for dispersed living but in a environmentally responsible way. This could be done with practical steps–increased telecommuting, more tree-planting and flexible work arrangements–that would enhance not only the environment but also day-to-day life for hundreds of millions of people.

    Similarly, environmentalists should redouble their efforts to provide more access to open space for millions of people through expanded purchases of land throughout the country. America’s highly productive agricultural sector has jettisoned millions of acres of land from cultivation, providing an excellent opportunity for purchases for public use. In some areas, abandoned industrial or mining properties could be rehabilitated as natural areas.

    Such changes, however, require a re-evaluation of the values that now drive the green movement. Whether in California or Calcutta, it boils down to the existential question: Do humans matter?

    Frederick Law Olmsted explained his plan for New York’s Central as an attempt “to supply to the hundreds of thousands of tired workers … a specimen of God’s handiwork.” This represents the kind of sensibility that could transform the green movement from an obstacle to people’s aspiration to a force for greater human happiness.

    This article originally appeared at Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His next book, The Next Hundred Million: America in 2050, will be published by Penguin Press early next year.