New Geography

Category: Politics

  • California Politicians Not Serious About Fixing Housing Crisis

    California’s political leaders, having ignored and even abetted our housing shortage, now pretend that they will “solve it.” Don’t bet on it.

    Their big ideas include a $4 billion housing subsidy bond and the stripping away of local control over zoning, and mandating densification of already developed areas. None of these steps addresses the fundamental causes for California’s housing crisis. Today, barely 29 percent of California households, notes the California Association of Realtors, can afford a median-priced house; in 2012, it was 56 percent.

    At the heart of the problem lie “urban containment” policies that impose “urban growth boundaries” to restrict — or even prohibit — new suburban detached housing tracts from being built on greenfield land. Given the strong demand for single-family homes, it is no surprise that prices have soared.

    Before these policies were widely adopted, housing prices in California had about the same relationship to incomes as in other parts of the country. Today, prices in places like Los Angeles, the Bay Area and Orange County are two to three times as high, adjusted for incomes, as in less-regulated states. Even in the once affordable Inland Empire, housing prices are nearing double that of most other areas, closing off one of the last remaining alternatives for middle- and working-class families.

    How did we get here?

    Largely in response to regulatory constraints, the state has been underproducing housing since the 1970s. So far this year, Los Angeles, the nation’s second-largest metropolitan region, has produced fewer homes than much smaller areas like Dallas-Fort Worth, Houston and Atlanta.

    The California Environmental Quality Act and other laws and restrictions have helped to make building the number of houses needed by California’s middle-income families unattainable. The state’s more recent draconian climate change policies are also making the building of more affordable homes, usually on the fringe of urban areas, almost impossible.

    Some developers and planners blame much of the problem on NIMBYs, or “not in my backyard” activists, who oppose high-density development in their communities. NIMBYism, often aligned with green policies, is part of the problem, but high-density housing is expensive, and there are not enough people looking for “micro-apartments” to solve the affordability crisis.

    Indeed, housing in buildings of more than five stories requires rents approximately two-and-a-half times those from the development of garden apartments, notes Gerard Mildner, academic director of the Center for Real Estate at Portland State University. In the San Francisco Bay Area, the cost of townhouse development per square foot can double that of detached houses (excluding land costs), and units in high-rise condominium buildings can cost up to seven-and-a-half times as much.

    Longtime San Francisco journalist Tim Redmond points out that luxury apartments tend to replace the often more affordable older buildings in urban neighborhoods. There’s been a gusher of high-rises built in places like San Francisco or Los Angeles, but these are generally very expensive, and have not discernibly lowered prices.

    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.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photo credit: refundrealestate.com

  • Spotlight on Infrastructure After Harvey

    The recent tragic events in Houston and across the Gulf Coast once again demonstrated the woeful inadequacy of our infrastructure. Hopefully, some good will come of Hurricane Harvey. Hopefully, it will jump-start the long-awaited Trump initiative on infrastructure, which may be the one issue that could unite this country.

    Northeastern University’s post-disaster resiliency expert Daniel Aldrich notes the need for better storm water drainage systems and for fortifying existing infrastructure — and not just in Houston. Helping promote such investments represents perhaps the last best chance for creating a significant Trump legacy.

    Once a leader in world infrastructure, the United States now ranks 11th in the overall quality of its infrastructure, according to the latest World Economic Forum Global Competitiveness Index. This decline has consequences. In California, for example, the lack of investment in water storage both worsened the recent drought and reduced the state’s ability to take advantage of heavy rains when they arrived.

    A concerted effort to restore our nation’s bridges, roads, harbors and other critical infrastructure would also mark a significant break from the Obama era stimulus which focused more on propping up renewable energy and often underused mass transit systems. Meanwhile, our overall infrastructure continued to deteriorate during the Great Recession, even with the stimulus, with spending in decline from over $300 billion in 2008 to under $250 billion in 2013.

    Spending Smartly

    “Efficiency is doing things right,” legendary management guru Peter F. Drucker once proclaimed. “Effectiveness is doing the right things.” In the context of infrastructure, being effective means placing our bets on things that are really needed, and could reward our society with greater productivity, wealth and new employment.

    At Newgeography.com, where I serve as executive editor, we recently carried a report from the Houston-based Center for Opportunity Urbanism, “Doing the Right Things Right,” which lays out what an infrastructure strategy would look like given current budget constraints. The United States faces a national debt of $20 trillion, while the federal government deficit was projected to reach $693 billion for fiscal year 2017.

    A strong U.S. transportation infrastructure system facilitates economic growth, job creation, a better standard of living and less poverty by minimizing travel times and improving labor market efficiency. Yet, as “Doing the Right Things Right” makes clear, not all investments are the same, or should receive federal subsidies, whether for direct expenditures or to issue infrastructure bonds to support private investment. There have been too many examples of spending on lower priority infrastructure because politicians were more interested in securing pork, or votes, than accelerating economic growth or reducing constituents’ travel times.

    To be sure, America’s infrastructure has performed well enough to provide the highest standard of living for the largest number of people in the world. The legacy of earlier infrastructure decisions, such as the completion of the interstate highway system, is still evident. Overall, the amount of time America’s commuters spend in peak period traffic congestion is generally better than that of international competitors.

    Yet traffic problems are increasing in the nation’s largest metropolitan areas. A recent study found that traffic congestion imposed $132 billion in excess fuel and time costs for automobile drivers and $28 billion in freight costs annually — all ultimately absorbed by consumers.

    The key question is how we meet these challenges. One proposed solution is to increase spending on traditional mass transit. This works well largely in “legacy cities” such as Washington, Chicago, Boston, Philadelphia, San Francisco and New York. The city of New York alone represents a remarkable 36 percent of all U.S. transit commuting, yet has only 3 percent of the jobs. Outside of these cities, the new transit projects, principally rail lines, have done little or nothing, as a recent report on transit from Chapman University demonstrates, to slow congestion or attract significant ridership.

    Among 19 metropolitan areas that added high-capacity transit systems since 1980, both bus and rail, transit’s market share has fallen from 4.7 to 4.6 percent compared to the last data before the systems opened. Transit has not, on balance, reduced solo driving, which increased from an average of 73.0 percent to 76.6 percent.

    The cities with rail systems opening after the 1990 Census experienced a modest decline in transit work trip market share, from 3.8 percent in 1990 to 3.7 percent in 2013.

    Take the absurd example of Los Angeles, which has spent over $15 billion trying to become what some mass transit enthusiasts call the “next great transit city.” Yet, Los Angeles County Metropolitan Transportation Authority system ridership stands at least 15 percent below 1985 levels, when there was only bus service, at a time when the population of Los Angeles County was 20 percent lower. Since 1990, transit’s work trip market share in the Los Angeles metropolitan area has dropped from 5.6 percent to 5.1 percent. No surprise, then, that according to a recent USC study, the new lines have done little or nothing to lessen congestion.

    Doing Your Homework

    The irony is that billions are being spent on these ineffective systems, when the places that depend on transit, like New York and Washington, are seeing their systems become less reliable and even dangerous. We are dumping money in some locations that don’t work all that well, but can’t find funds to fix systems that remain essential to “legacy cities” with large downtowns ideal for transit ridership.

    With the expense and ineffectiveness of new rail systems, it seems that the time has arrived for transit services that focus on less expensive bus systems, including those run by private companies, which can carry so many more riders for so much less in taxpayer subsidies. There are also opportunities to make lightly used but highly subsidized services more cost-effective by adding ride-hailing systems, like Uber and Lyft, cited as a factor in recent ridership declines in Los Angeles and even New York. In suburban San Francisco, a local transit operator has established a pilot program to extend service through ride-hailing and cancelled a lightly patronized bus route, reducing costs while providing quicker door-to-door service.

    One of the most promising alternatives, virtually ignored by transit advocates, is to encourage options for working at home. In many metropolitan areas, more people already telecommute than take transit. Since 1980, the number of people working at home has grown three times that of transit riders. All this, at virtually no cost to taxpayers.

    In the future, rapidly evolving autonomous technologies could make our present transit systems archaic in most cities. Under any circumstance, these advances seem likely to further weaken conventional transit. Given these trends, why base our transit policy on 19th century technologies when we are about to enter the third decade of the 21st?

    Back to the Gulf: Resiliency, not Hysteria

    “Smart growth” advocates have been quick to argue that Hurricane Harvey’s unprecedented damage can be traced to Houston’s freewheeling, free-market approach to real estate development. Sure, the area got 50 inches of rain, but it fell both on communities that eschew strict zoning and those which embrace it. They somehow forget that a lesser storm, Hurricane Sandy, devastated the highly planned communities of greater New York just a few years ago, causing $19 billion in damage in the city alone – and with far less rain.

    Rather than imitate Portland or San Francisco, Houston and other Gulf communities need to maintain policies that have allowed it to avoid the kind of insane price hikes one sees on the West Coast and some Northeastern housing markets. To force Houston to act like San Francisco would kill its economy. If Texas real estate prices approach California’s, people will simply move elsewhere, where prices are lower.

    Some changes may be necessary, including “coastal restoration” efforts that limit the impact of storms like Harvey. Major engineering challenges, like building more water storage facilities and improved drainage, need to be imposed, as well.

    What Houston needs, and would naturally adopt, is a kind of enlightened free market approach. After the devastation of Galveston in 1900 hurricane, Houston famously built a ship channel while Galveston built an elaborate sea wall; Houston is no less a creation of private innovation and government than New York or Los Angeles. Like America itself, Houston thrives by combining good public investment with a maximum of economic flexibility.

    The more these decisions are made locally, by people who are directly impacted, the better. My colleague Tory Gattis, based in Houston, suggests that new developments and older ones “should be required to have adequate rainwater retention, either with ponds, tanks, or permeable surfaces.” There are already examples of some of this kind of planning, particularly in exurban communities such as the Woodlands. This may mitigate the ill effects of such storms, but not likely to prevent disasters like Harvey from inflicting huge damage.

    These policies could mean, over time, that Houston and other Gulf communities might build an infrastructure more reminiscent of Frank Lloyd Wright’s Broadacre City, scattered communities with ample open land around them. But the vision must be a localized one, not drawn from example of generally slower-growing, older regions facing very different natural challenges. The benefits to customizing local infrastructure is go beyond economic reality and even disaster mitigation. With enough focus on local needs, we need not wait for natural disasters to witness the heartwarming sights of multi-cultural first responders – and ordinary citizens – all pulling together. “Social networks and cohesion are an important part of recovery and survival,” professor Aldrich suggests. “Houston should be investing in bringing neighborhoods together.”

    This is the real secret sauce for resiliency, as Houston has been showing throughout this crisis. The more that people who are impacted control the till, whether repairing levees, imposing regulations or planning transit systems, the better. Rather than let Leviathan rule and impose conformity, we should let regions — whether in Texas or elsewhere — figure out how to meet infrastructure challenges that effect every community differently.

    This piece originally appeared on Real Clear Politics.com.

    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.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photo: Hurricane Harvey flooding by Jill Carlson, via Flickr, using CC License.

  • Trump Must Go, But the Disruption Must Stay

    The great disrupter is rapidly becoming a great disaster — for the country, his party and even his own political base. In order to save anything from his landmark 2016 victory, President Donald Trump must go — the sooner, the better.

    Trump is leading us into a political climate that more resembles Lebanon or Weimar Germany or the United States in the run-up to the Civil War. Not all blame for the current lunacy belongs to The Donald, however. Much of it stems from an increasingly unhinged progressive culture. Yet, even granting that, Trump has made bad things worse, as even some of his supporters note, with unconsidered utterances, poorly masked appeals to xenophobes — and even racists — and his churlish persona.

    With declining ratings, most critically among independents, Trump has squandered, as the Chinese would put it, “the mandate of heaven,” and should be nudged out, hopefully under his own power. Impeachment, in contrast, would seem to his supporters to be something of a coup d’état, as former President Barack Obama’s political consigliere, David Axelrod, has suggested.

    A necessary disruption

    Although I always thought him too thin-skinned and profoundly ignorant to be president, Trump successfully disrupted a dysfunctional political system that needed to be disrupted. Before Trump, politicians might appeal to populist sentiments, but they remained the prisoners of K Street lobbyists. Like Sen. Bernie Sanders, Trump ran — and won — against the D.C. oligarchy, creating a populist standard that could well spell the demise of the neoliberal era.

    Trump’s election represented a necessary challenge to the coastal-dominated Democratic Party, as well as to the establishment GOP, who regard his “Made in America” program as too banal for their sophisticated, and well-compensated, tastes. These people, as liberal journalist Thomas Frank has noted, flourished under both Obama and George W. Bush, while the middle class and minorities saw little improvement in their incomes or quality of life.

    Trump’s challenge to various neoliberal policies — open borders, “free trade,” and ever more intrusive managerial rule from Washington — has threatened those who, to be frank, needed to be called to account. It is critical to recall that both the political and corporate establishments, including Wall Street, largely opposed Trump’s populist nationalism as much as they hated Sanders’ socialist politics.

    Read the entire piece at The Orange County Register.

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

    Photo: By Michael Vadon (Own work) [CC BY-SA 4.0], via Wikimedia Commons

  • The Great Transit Rip-Off

    Over the past decade, there has been a growing fixation among planners and developers alike for a return to the last century’s monocentric cities served by large-scale train systems. And, to be sure, in a handful of older urban regions, mass transit continues to play an important — and even vital — role in getting commuters to downtown jobs. Overall, a remarkable 40 percent of all transit commuting in the United States takes place in the New York metropolitan area — and just six municipalities make up 55 percent of all transit commuting destinations.

    But here’s an overlooked fact: Transit now serves about the same number of riders as it did in 1907, when the urban population was barely 15 percent of what it is today. Most urban regions, such as Southern California, are nothing like New York — and they never will be. Downtown Los Angeles may be a better place in which to hang out and eat than in the past, but it sorely lacks the magnetic appeal of a place like Manhattan, or even downtown San Francisco. Manhattan, the world’s second-largest employment center, represents a little more than 20 percent of the New York metropolitan area’s employment. In Los Angeles, by contrast, the downtown area employs just 2 percent.

    Transit is failing in Southern California

    As we demonstrate in a new report for Chapman University, our urban form does not work well for conventional mass transit. Too many people go to too many locales to work, and, as housing prices have surged, many have moved farther way, which makes trains less practical, given the lack of a dominant job center. But in its desire to emulate places like New York, Los Angeles has spent some $15 billion trying to evolve into what some East Coast enthusiasts call the “next great transit city.”

    The rail lines have earned Mayor Eric Garcetti almost endless plaudits from places like the New York Times. Yet, since 1990, transit’s work trip market share has dropped from 5.6 percent to 5.1 percent. MTA system ridership stands at least 15 percent below 1985 levels, when there was only bus service, and the population of Los Angeles County was about 20 percent lower. In some places, like Orange County, the fall has been even more precipitous, down 30 percent since 2008. It is no surprise, then, that, according to a recent USC study, the new lines have done little or nothing to lessen congestion.

    This experience is not limited to L.A. Most of the 19 metropolitan areas with new mass transit rail systems — including big cities like Atlanta, Houston, Dallas and even Portland, Ore. — have experienced a decline in transit market share since the systems began operations.

    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.

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photo: Esirgen (Own work) [CC BY-SA 3.0], via Wikimedia Commons

  • Trump Damaged Democracy, Silicon Valley Will Finish It Off

    When Democrats made their post-election populist “Better Deal” pitch, they took a strong stance against pharmaceutical and financial monopolies. But they conspicuously left out the most profound antitrust challenge of our time—the tech oligarchy.

    The information sector, notes The Economist, is now the most consolidated sector of the American economy.

    The Silicon Valley and its Puget Sound annex dominated by Google, Apple, Facebook, Amazon, and Microsoft increasingly resemble the pre-gas crisis Detroit of the Big Three. Tech’s Big Five all enjoy overwhelming market shares—for example Google controls upwards of 80 percent of global search—and the capital to either acquire or crush any newcomers. They are bringing us a hardly gilded age of prosperity but depressed competition, economic stagnation, and, increasingly, a chilling desire to control the national conversation.

    Jeff Bezos harrumphs through his chosen megaphone, The Washington Post, about how “democracy dies in the dark.” But if Bezos—the world’s third richest man, who used the Post first to undermine Bernie Sanders and then to wage ceaseless war on the admittedly heinous Donald Trump—really wants to identify the biggest long-term threat to individual and community autonomy, he should turn on the lights and look in the mirror.

    Trump’s election and volatile presidency may pose a more immediate menace, but when he is gone, or neutered by lack of support, the oligarchs’ damage to our democracy and culture will continue to metastasize.

    Killing the Old Silicon Valley

    Americans justifiably take pride in the creative and entrepreneurial genius of Silicon Valley. The tech sector has been, along with culture, agriculture, and energy, one of our most competitive industries, one defined by risk-taking and intense competition between firms in the Valley, and elsewhere.

    This old model is fading. All but shielded from antitrust laws, the new Silicon Valley is losing its entrepreneurial yeastiness—which, ironically enough, was in part spawned by government efforts against old-line monopolists such as ATT and IBM. While the industry still promotes the myth of the stalwart tinkerers in their garages seeking to build the next great company, the model now is to get funding so that their company can be acquired by Facebook or one of the other titans. As one recent paper demonstrates, these “super platforms” depress competition, squeeze suppliers and reduce opportunities for potential rivals, much as the monopolists of the late 19th century did (PDF). The rush toward artificial intelligence, requiring vast reservoirs of both money and talent, may accelerate this consolidation. A few firms may join the oligarchy over time, such as Tesla or Uber, but these are all controlled by the same investors on the current Big Five.

    This new hierarchy is narrowing the path to riches, or even the middle class. Rather than expand opportunity, the Valley increasingly creates jobs in the “gig economy” that promises not a way to the middle class, much less riches, but into the rising precariat—part-time, conditional workers. This emerging “gig economy” will likely expand with the digitization of retail, which could cost millions of working-class jobs.

    For most Americans, the once promising “New Economy,” has meant a descent, as MIT's Peter Temin recently put it, toward a precarious position usually associated with developing nations. Workers in the “gig economy,” unlike the old middle- and working-class, have little chance, for example, of buying a house—once a sure sign of upward mobility, something that is depressingly evident in the Bay Area, along the California coast, and parts of the Northeast.

    Certainly the chances of striking out on one’s own have diminished. Sergei Brin, Google’s co-founder, recently suggested that startups would be better off moving from Silicon Valley to areas that are less expensive and highly regulated, and where the competition for talent is not dominated by a few behemoths who can gobble up potential competitors—Instagram, WhatsApp, Skype, LinkedIn, Oculus—or slowly crush them, as may be happening to Snap, a firm that followed the old model and refused to be swallowed by Facebook but went through with its own public offering. Now the Los Angeles-based company is under assault by the social media giant which is using technologies at its Instagram unit, itself an acquisition, that duplicate Snap’s trademark technologies and features.

    Snap’s problems are not an isolated case. The result is that the number of high-tech startups is down by almost half from just two years ago; overall National Venture Capital Association reports that the number of deals is now at the lowest level since 2010. Outsiders, the supposed lifeblood of entrepreneurial development, are increasingly irrelevant in an increasingly closed system.

    The New Hierarchy

    For all its talk about “disruption,” Silicon Valley is increasingly about three things: money, hierarchy, and conformity. Tech entrepreneurs long have enjoyed financial success, but their dominance in the ranks of the ultra-rich has never been so profound. They now account for three of world’s five richest people—Bill Gates, Jeff Bezos, and Mark Zuckerberg—and dominate the list of billionaires under 40.

    Unlike their often ruthless and unpleasant 20th century moguls, the Silicon Valley elite has done relatively little for the country’s lagging productivity or to create broad-based opportunity. The information sector has overall been a poor source of new jobs—roughly 70,000 since 2010—with the gains concentrated in just a few places. This as the number of generally more middle-class jobs tied to producing equipment has fallen by half since 1990 and most new employment opportunities have been in low-wage sectors like hospitality, medical care, and food preparation.

    The rich, that is, have gotten richer, in part by taking pains to minimize their tax exposure. Now they are talking grandly about having the government provide all the now “excess” humans with a guaranteed minimum income. The titans who have shared or spread so little of their own wealth are increasingly united in the idea that the government—i.e., middle-class taxpayers—should spread more around.

    Not at all coincidentally, the Bay Area itself—once a fertile place of grassroots and middle-class opportunity—now boasts an increasingly bifurcated economy. San Francisco, the Valley’s northern annex, regularly clocks in as among the most unequal cities in the country, with both extraordinary wealth and a vast homeless population.

    The more suburban Silicon Valley now suffers a poverty rate of near 20 percent, above the national average. It also has its own large homeless population living in what KQED has described as “modern nomadic villages.” In recent years income gains in the region have flowed overwhelmingly to the top quintile of income-earners, who have seen their wages increase by over 25 percent since 1989, while income levels have declined for low-income households.

    Despite endless prattling about diversity, African Americans and Hispanics who make up roughly one-third of the valley’s population, have barely 5 percent of jobs in the top Silicon Valley firms. Between 2009 and 2011, earnings dropped 18 percent for blacks in the Valley and by 5 percent for Latinos, according to a 2013 Joint Venture Silicon Valley report (PDF).

    Similarly the share of women in the tech industry is barely half of their 47 percent share in the total workforce, and their ranks may even be shrinking. Stanford researcher Vivek Wadhwa describes the Valley still as “a boys’ club that regarded women as less capable than men and subjected them to negative stereotypes and abuse.”

    While the industry hasn’t done much to actually employ women or minorities, it’s both self-righteously and opportunistically fed the outrage industry by booting right-wing voices from various platforms and pushing out people like former Google staffer James Damore, and before that Mozilla founder Brendan Eich after he made a small contribution to a 2014 measure banning gay marriage. Skepticism, once the benchmark of technology development, is now increasingly unwelcome in much of the Valley.

    This marks a distinct change from the ’80s and ’90s, when the tech companies—then still involved in the manufacturing of physical products in the United States—tended toward libertarian political views. As late as the 1980s, moderate Republicans frequently won elections in places like San Mateo and Santa Clara. Now the area has evolved into one of the most one-sidedly progressive bastions in the nation. Over 70 percent of Bay Area residents are Democrats up from 55 percent in the 1970s. Today, the Calexit backers, many based in the Valley, even think that the country is too dunderheaded, and suggest they represent “different,” and morally superior, values than the rest of the country.

    The Danger to Democracy

    If these were policies adopted by an ice-cream chain, or a machine-tool maker, they might be annoying. But in the tech giants, with their vast and growing power to shape opinion, represent an existential threat. Mark Zuckerberg whose Facebook is now the largest source of media for younger people, has emerged, in the words of one European journalist (PDF), as “‘the world’s most powerful editor.” In the past they were the primary carriers of “fake news,” and have done as much as any institution to erode the old values (and economics) of journalism.

    Both Facebook and Google now offer news “curated” by algorithms. Bans are increasingly used by Facebook and Twitter to keep out unpopular or incendiary views, and especially in the echo chamber of the Bay Area. This is sometimes directed at conservatives, such as Prager University, whose content may be offensive to some, but hardly subversive or “fake.” The real crime now is simply to question dominant ideology of Silicon Valley gentry progressivism.

    Even at their most powerful the industrial age moguls could not control what people knew. They might back a newspaper, or later a radio or television station, but never secured absolute control of media. Competing interests still tussled in a highly regionalized and diverse media market. In contrast the digital universe, dominated by a handful of players located in just a few locales, threaten to make a pluralism of opinions a thing of the past. The former Google design ethicist Tristan Harris suggests that “a handful of tech leaders at Google and Facebook have built the most pervasive, centralized systems for steering human attention that has ever existed.”

    Ultimately, particularly after the disasters associated with the Trump regime, the oligarchs seem certain to expand their efforts to control the one institution which could challenge their hegemony: government. Once seen as politically marginal, the oligarchs achieved a dominated role in the Democratic Party, in part by financing President Obama and later support for Hillary Clinton. In the Obama years Google operatives were in fact fairly ubiquitous, leading at least one magazine to label it “the Android Administration.” Since then a stream of Obama people have headed to Silicon Valley, working for firms such as Apple, Uber, and Airbnb. Obama himself has even mused about becoming a venture capitalist himself.

    Of course with Trump in power, the oligarchs are mostly on the outs, although the twitterer in chief tried to recruit them. Now many of Silicon Valley power players are supporting the “resistance” and lending their expertise to Democratic campaigns. Unlike undocumented immigrants or other victims of Trumpism, they can count on many GOP politicians to watch their flank until the lunatic storm recedes.

    In a future Democratic administration, as is already evident in places like California, the tech titans will use their money, savvy, and new dominance over our communications channels to steer and even dictate America’s political and cultural agendas to wield power in ways that even the likes of J.P. Morgan or John D. Rockefeller would envy.

    What started as a brilliant, and profoundly non-political extension of the information revolution, notes early Google and Facebook investor Robert McNamee, now looms as “a menace,” part of a systematic “brain hacking” on a massive scale. We can choose to confront this reality—as the early 20th century progressives did—or stand aside and let the oligarchs chart our future without imposing any curbs on their seemingly inexorable hegemony.

    This piece first appeared on The Daily Beast.

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

    Photo: Maurizio Pesce, via Flickr, using CC License.

  • 30 Days a Black Man

    The following is adapted from Bill Steigerwald’s new book 30 Days a Black Man: The Forgotten Story That Exposed the Jim Crow South. The book traces a forgotten but important 1948 undercover journalism mission into the Jim Crow South by a star Pittsburgh Post-Gazette newsman.

    Ray Sprigle, a Pulitzer Prize winner, disguised himself as a black man and spent a month seeing what life was like for the ten million African Americans living under America’s oppressive and humiliating system of apartheid.

    Sprigle’s nationally syndicated newspaper series about his experiences – and his passionate outrage at the un-American inequities he saw – shocked the white readers of the North, outraged the segregationist white newspaper editors of the South, pleased millions of black Americans and started the first debate in the national media about the future of legal segregation.

    Steigerwald’s book, available on Amazon, includes a snapshot of Pittsburgh’s vibrant Hill District, the integrated urban black working-class neighborhood nicknamed “Little Harlem” and made famous by the plays of August Wilson. Below is an excerpt from the book Kirkus Reviews calls a “rollicking, haunting American history”.

    Pittsburgh in White and Black

    Pittsburgh was feeling pretty good about itself in the fall of 1947. The capital city of what Franklin Roosevelt called “The Great Arsenal of Democracy” was still basking in the glory of supplying most of the steel America needed to win World War II. Its population was about to hit its all-time peak of 676,000. It was the twelfth largest city in the USA and the busy hub of a productive metropolitan area of 2.6 million. It was true that it was noisy, shockingly dirty, ugly, dense with people, clogged with traffic, polluted with industrial wastes, and pocked with hard urban poverty. But it had enormous corporate and private wealth, top-flight universities, and major-league culture and sports.

    Pittsburgh’s metropolitan population was 90 percent non-Latino white, predominantly Catholic, and heavily Democratic – and remains virtually the same today. Its huge blue-collar workforce was religiously pro-union. Inside Pittsburgh’s crowded city limits were a dozen middle-class urban neighborhoods, thousands of fine homes, and many mansions. There were also scores of ethnic working-class neighborhoods built on the sides of cliffs, on the top of hills, or stretched out in ravines and hollows or along the rivers. There was no single large black ghetto. But about 112,000 blacks, including many recent migrants from the South, lived within the city or nearby in tight neighborhoods in smaller towns throughout Allegheny County.

    With the war over, the “Smokey City” had finally started the long-overdue process of cleaning up its air. The average Pittsburgher had no reason to think their city was headed anywhere but up, and yet beneath the permanent fog of smoke and steam its sprawling four-hundred-acre steel mills were sliding toward obsolescence. Over the next three decades, metropolitan Pittsburgh would be forced to de-industrialize by national and global economic forces beyond its control. Its mighty steel industry would collapse. It would hemorrhage population, become the unofficial capital of the Rust Belt and then slowly recover by diversifying its stagnant economy, so that health care, education, and government became its chief job providers. But in the fall of 1947 it was still a prosperous industrial city living of its glorious past, a place where hourly wages of nearly two dollars and generous benefit packages made the region’s union steelworkers the highest paid blue-collar workers in the world.

    To say the city’s largely unskilled black workforce was not sharing equally in the industrial bonanza of Pittsburgh is an understatement…. Job opportunities for blacks in the North were far better than in the Jim Crow South, yet they were far from equal. In both public and private employment, black men and women in Pittsburgh were rarely able to get good blue-collar jobs and seldom able to advance if they got one. They were hired last, red first, and invariably paid less. There was a distinct color line in Pittsburgh’s steel and construction industries. About 40 percent of the area’s employers, including some of the largest, barred black employees outright. The unions that controlled the best industrial jobs were virtually lily-white and intent on staying that way. Meanwhile, white-collar jobs for black men were virtually nonexistent in business, finance, real estate, education, and medicine.

    Legal segregation in housing didn’t exist in Pittsburgh, but its urban and suburban neighborhoods were nevertheless segregated. As in other northern cities, real estate agents and private housing developers wrote restrictive covenants into the contracts of white homebuyers that prohibited the resale of their homes to someone of a different race. As Richard Rothstein documents in his best-seller, “The Color of Law: A Forgotten History of how our Government Segregated America,” federal housing policy enforced segregation by requiring builders to include restrictive covenants in their new developments. White landlords kept their apartment buildings segregated. Less subtly, real estate agents simply would never show a black couple a house for sale in a white suburb.

    Other common but no less degrading varieties of Jim Crow–like private discrimination existed throughout Pittsburgh. Black shoppers couldn’t try on clothes in downtown department stores. Black baseball fans had to sit in certain sections of Forbes Field, where the Pittsburgh Pirates played. Black kids were expected to swim only in the city’s traditionally all-black public swimming pools, and as late as 1945 blacks had to sit in the balcony at neighborhood movie theaters. The best hotels in the city refused black guests no matter how famous, which is why Jackie Robinson, Paul Robeson, Louis Armstrong, and other notable visitors regularly had to stay in the Hill District, the city’s largest and most important black neighborhood.

    The Hill District occupied the high ground in the center of Pittsburgh, but it was the city’s most depressed neighborhood. Nicknamed “Little Harlem” for its nationally famous jazz scene and jumping nightlife, it was a predominately poor but vibrant urban neighborhood of about forty thousand blacks and ten thousand whites. The Hill’s disorderly maze of residential streets, business districts, rundown apartments, and junked-up alleys looked over at the stumpy skyline of downtown from a steep but walkable slope. The area was originally settled by immigrants from Ireland, Germany, and Eastern Europe… By the late 1940s the Hill District contained the largest concentration of blacks in metropolitan Pittsburgh. It was also home to two dozen nationalities, including Italians, Russian Jews, Greeks, Eastern Europeans, and Syrians.

    An unregulated, loosely policed city within the city, the Hill’s bustling, self-sustaining, partially subterranean economy provided virtually everything its human melting pot needed. Its schools, shopping districts, nightclubs, gambling dens, and whorehouses were integrated. Blacks owned and operated hotels, bars, movie theaters, restaurants, groceries, drugstores, clothing stores, photography studios, florists, bookstores, funeral homes, and social clubs. There was a black YMCA. A cheap, efficient but illegal system of unlicensed cabs called “jitneys,” which still thrives in the Age of Uber, took care of the transit needs of everyone from grandmothers to bar hoppers. Rising above the dense human commerce and poverty were the spires and pointed roofs of two dozen churches and several synagogues.

    The Hill District was home to the Pittsburgh Courier, the country’s largest and most widely distributed black newspaper. But during the 1930s and 40s, it was more famous around the country for two things— baseball and jazz. The Pittsburgh Crawfords and the Homestead Grays, two of the best teams in the history of the professional Negro baseball leagues, were based in the Hill District. Its black community was an incubator of a dozen seminal jazz musicians including Earl “Fatha” Hines, the father of modern jazz piano, and baritone crooner Billy Eckstine, who in 1947 was poised to become white America’s first major black pop singer. Unlike venues downtown or in the suburbs, where blacks were usually excluded or made to use their own dance pavilion, the Hill’s entertainment complex was colorblind. Its integrated clubs and dancehalls were one of the few places in Pittsburgh where blacks and whites constantly socialized.

    Despite its energy and glamour, however, by 1947 Little Harlem was in terrible socioeconomic shape. The Lower Hill, where sixty-four hundred black and sixteen hundred white people lived, rented, worked, went to school, and worshipped, was particularly distressed. You could buy everything from refrigerators and Italian ice to marijuana, kosher hot dogs, and live chickens on its teeming streets. Violence was rare. The sidewalks were generally safe for kids, women, old folks, preachers, numbers runners, or a friendly game of craps. Men played checkers outside late into the night and people slept on fire escapes in the summer, but there was nothing romantic about its ratty urban poverty.

    The Lower Hill’s rough apartments and tenements were overcrowded, rundown, dirty from years of smoke and soot. Part of it was a classic urban slum. Communal faucets in the hallways and outdoor privies were common and private bathrooms were rare. Decades of malign neglect by city hall had made things worse. Streets—many not paved—were maintained poorly at best. Police and re protection, as well as health and sanitation services, was inadequate. Making matters worse, many of the Hill District’s middle-class blacks and professionals had moved to better black city neighborhoods. Most of the blacks left behind were poor or lower-middle working class. They were maids, garbage men, waitresses, bartenders, musicians, jitney drivers, and small-time criminals.

    For most of Pittsburgh’s older, squarer, law-abiding white population, Little Harlem was an unknown and scary place they’d never dare to go. Along with the great jazz scene, it was where poverty, vice, violence, and black people dwelled. The city’s three daily newspapers—the Press, the Post-Gazette, and Sun-Telegraph—rarely mentioned the Hill or its “colored” residents. They The all-white papers didn’t care about the Hill District’s present or its future. In 1947 city hall was quietly making plans to raze and redevelop Pittsburgh’s worst slums, which meant bulldozers and wrecking balls were coming for the unsuspecting people living in the city’s poor and politically defenseless neighborhoods. The Hill was the planners’ first target and the white newspapers were enthusiastic propagandists and cheerleaders in the brutal crusade for civic progress and urban renewal.

    To the square white men who made the important decisions in town—the entrenched Democratic Party machine, zillionaire businessman Richard King Mellon, and a handful of lesser Republican corporate honchos, boosters, and newspapermen—the Hill was not hip or culturally exciting. It was not a self-reliant community of hustling people, black and white, who needed to be given a helping hand by government or have their lives improved with new jobs or better housing. It was a cancerous slum that threatened the future growth, health, and beauty of their cosmetically challenged city. Pittsburgh’s powerbrokers had plans for a new cultural center for rich white people like themselves and a dozen identical upscale apartment towers. Within a decade a hundred acres of the Lower Hill would be clear-cut to the sidewalks and thousands of people who called it home, most of them poor and black, would be gone without a trace.

    Bill Steigerwald worked for the LA Times in the 1980s, the Pittsburgh Post-Gazette in the 1990s and the Pittsburgh Tribune-Review in the 2000s. He lives south of Pittsburgh and is a part-time Uber driver while he prays for Hollywood to turn 30 Days a Black Man into a movie.

  • A Different Kind of Border Wall

    To slow mass migration, stop the illicit capital flight from poor to rich countries.

    An asset manager called ____ Capital recently sent out this email seeking referrals:

    The US Investor visa program allows one to invest $500,000 U.S. in a government licensed fund for a period of about five years and in around 18 months, a conditional green card is attained for the investor and their immediate family. The investor and their family can live, work and study anywhere in the United States and there are no educational, age or English language requirements.

    Most experts report that on September 30th the investment amount will increase from $500k to $1.3m, a significant jump that will price out many potential investors.

    There is still time to file before September 30th if you start your process with ____ Capital now.

    Others can comment on the practice of selling green cards (and ultimately US citizenships) to wealthy foreigners while millions of other applicants, some of whom would be greater contributors to the United States, continue to wait in line for years. Our concern is one step removed and has to do with the legality of this money.

    Give me your rich, but no huddled masses. (photo: populyst)

    It would be unfortunate if foreign money inflows into the US, whether green card-related or not, benefited only a small number of American fund managers and real estate developers while they lowered the standard of living of larger numbers of Americans, for example by crowding them out of some cities because of rising home prices. But it would be doubly unfortunate if some of this money was also illicit, in other words stolen or obtained through dubious maneuvers by corrupt or crony foreign government officials and corporate executives.

    Indeed, to use just one example, the fact that the identity of many buyers in New York’s newest condominiums is cloaked by the use of shell companies is unhelpful to anyone claiming that these vast incoming sums are mostly clean money. For more on this, see Manhattan Ultra-Luxury ‘Battling the Serpent of Chaos’.

    Why Mass Migration

    Before we loop and close this circle, let us examine a very related issue: the mass migration of people from poor countries towards Europe, North America and other wealthy nations.

    When considering the migrant crisis, from the Middle East, Asia and Africa into Europe, or from Asia and Latin America into the United States, the question among policy makers has been on whether and on how to allow or to stop the inflow of people: when, where, how and how many?

    But an antecedent question should be: what in the first place is causing these people to migrate thousands of miles, often at the risk of their own lives? Clearly the answer resides in the poor economies of their home countries. But then what accounts for this poor state of their economies?

    Capital flight must be one of the most important reasons. Modern economics and globalization encourage the free flow of capital. But what if this capital leaving poor countries was ill-obtained? What if it was stolen by corrupt government officials or corrupt corporate executives, or diverted unethically by cronies operating on the margin of legality?

    We do know that wealth and opportunity in many of these countries are hoarded by a small, insecure and often corrupt governing elite. Indeed it is the insecurity that accompanies such hoarding that naturally leads to a significant share of this capital being exported towards jurisdictions where the risk of seizure is deemed to be minimal.

    Yet rich country economies are already awash in capital due to extremely accommodative central bank monetary policy while at the same time poor countries are in dire need of capital to improve their own infrastructure and economy. Simply put, their economies need this money a lot more than ours do. If anything, our own economies may be suffering from too much capital because of extremely low interest rates.

    Closing the Loop

    This then is the reality of today. Rich countries have been on the one hand accepting with open arms the capital coming from poor countries and profiting from it handsomely, and on the other hand balking, to put it euphemistically, at accepting the people from these poor countries who are emigrating in part as a result of this large capital flight.

    The Honest Accounts report estimates that illicit capital outflows from sub-Saharan Africa alone totaled $67.6 billion in a single recent year and that the continent is a net creditor to the world to the tune of $41.3 billion per year.

    One way to think about it then is that migrants are coming to our shores after their country’s money has already come to our shores. As with your typical human being, their search for better living conditions are forcing them to follow the money, some of which happens to be their money. This is not to justify illegal immigration but to explain that it is at least partially a result of our open and undiscriminating stance towards incoming wealth.

    If, as Pope Francis recently stated, corruption steals from the poor, then its younger brother, cronyism, steals from the middle class. Of course, most poor countries don’t have a middle class and their elites therefore often don’t even bother to become cronies. With a weak judiciary, they go directly into corruption, usually with impunity until the levers of power change hands, which is not all that often.

    Parenthetically, it stands to reason that elites in poor countries would not love democracy at home because it reconfigures the power structure every few years in a way that threatens their standing and prosperity. These same elites however do love the democracy and fair play of rich countries because they are the conditions that allow them to safeguard their assets.

    For better or for worse, things are different now due to demographics and technology. For decades, all the power players – government officials, foreign corporations, safe-haven banks – have extracted a large share of wealth because the poor in underdeveloped nations were few, disorganized and largely uninformed. But now they are far more numerous, goaded by smugglers to emigrate, and better informed through the internet. See Working Age Population Around the World to understand the potential magnitude of the migrant issue.

    Where the Money Goes

    The image of the elite from poor countries living in the lap of luxury, jetting to their homes in New York, Miami and London, visiting their financial advisors in Zurich and Cayman, and educating their children at tony private colleges while the masses of their countries subsist in abject poverty, often without sanitation, water or electricity, is so widespread and so real that it has almost become an accepted cliche to most people.

    But to the European and American business and financial elite, the moneyed foreign elite is irresistibly cool, usually not because it is foreign but because it is moneyed and often free-spending. For every American consumer whose appetite for luxury goods is flagging, there may be two or three new wealthy consumers in emerging nations who are eager to collect luxury status symbols. If Louis Vuitton and BMW revenues were to stall in the United States, these firms would merely intensify their focus on new customers in the Middle East, Africa and Asia.

    Foreign elites are also big investors in the United States and Europe. The destination of flight capital is usually one of the following:

    • Banks or financial institutions that offer some secrecy and safety. Historically, this has been private banks domiciled in Switzerland but more recently, it has become any financial institution in an offshore financial center such as the Cayman Islands, Bermuda, Panama, Cyprus, the Channel Islands or other. The Tax Justice Network estimated in 2016 that $12 trillion from developing countries were parked in offshore havens.
    • This capital is then funneled by these banks to asset management firms, be they stock and bond funds, private equity funds or other, to be put to productive use through investments in the public or private markets (see footnotes 1 and 2).
    • Real estate projects in New York, Miami, London, Vancouver and many other places. In 2015, a report by the New York Times estimated that in six of Manhattan’s most expensive buildings, shell companies owned between 57 and 77 percent of the condominiums. (see footnote 3).
    • Other asset classes such as art where funds can be parked safely.

    So, here today, we are faced with this question: is it right to accept into our country another people’s money but to turn away the people themselves? And if we cannot, due to their sheer numbers, accept the people themselves without risking a disruption of our own politics and economics, shouldn’t we then at least turn away the illicit capital that is fleeing their countries? Shouldn’t that capital remain in their countries where it can help them build a better economy and thus remove or reduce their need to emigrate across the sea?

    Given that the number of working-age Africans and Asians is about to swell by hundreds of millions of additional job seekers, it would be prudent for us to encourage the capital originating in their countries to stay at home rather than come to rich countries where it is distorting prices in real estate and other markets. We may not be able to enforce a barrier against all such capital but it behooves us to try and limit the migration of illicit wealth, or to face the inevitable blowback, a human wave of tens of millions of migrants banging on the door to enter the rich world.

    Cruelty plays its hand artfully. Some large beneficiaries of foreign money inflows are also vociferous proponents of greater limits on immigration. These two positions can coexist harmoniously within the same brain only until the connection between the trillions in capital flight and the millions of migrants is exposed in full relief.

    _____________________

    1. Most of the returns on this capital underperform the major stock indices but custodians seem indifferent while they extract their own hefty fees. Meanwhile the owners of the capital don’t worry about a few percentage points of underperformance when their main motive is the safety of the principal. This is the real reason why hedge funds continue to thrive despite delivering poor performance. Their investors are more tolerant of subpar returns because the main alternative is to keep their money in their home countries where they could lose some or all of it in an unfriendly crackdown.

    2. In theory, the Patriot Act required financial institutions to investigate the sources of funds that they receive from foreign countries. But in practice, depositors with no suspected connection to terrorism are ostensibly granted the all clear. Finance firms are simply not staffed or equipped to differentiate between ill-gotten funds and clean funds.

    3. Here too, investors are relatively indifferent to the return they obtain and are merely looking to garage their wealth. Some of New York’s new high-rise condominiums have been called “safety deposit boxes with a view”.

    This piece originally appeared on Populyst.net

    Sami Karam is the founder and editor of populyst.net and the creator of the populyst index™. populyst is about innovation, demography and society. Before populyst, he was the founder and manager of the Seven Global funds and a fund manager at leading asset managers in Boston and New York. In addition to a finance MBA from the Wharton School, he holds a Master’s in Civil Engineering from Cornell and a Bachelor of Architecture from UT Austin.

    Photo by Mstyslav Chernov/Unframe (Own work) [CC BY-SA 4.0], via Wikimedia Commons

  • A New Way Forward on Trade and Immigration

    President Donald Trump’s policy agenda may seem somewhat incoherent, but his underlying approach — developed, in large part, by now-departed chief strategist Steve Bannon — can be best summarized in one word: nationalism. This covers a range of issues from immigration and trade to cultural and ethnic identity, and generally the ones with the most polarizing impact on our political system.

    To many progressives, nationalism is, by its very nature, a dirty word, associated with fascist, Nazi or otherwise repressive regimes throughout history, and tied to violent extremists among the “alt-right,” like the small group of truly “deplorables” that recently surfaced in Charlottesville, Va. Liberal globalists detested Trump’s Poland speech defending Western values. To them, progressive theology matters more than affiliation with political tradition. Assaults on free trade also concern tech and other corporate chieftains, whatever their impact on the American working class.

    Yet, despite his consistently ill-considered rhetoric, Trump is actually about half-right on nationalism. The postindustrial, globalized economy has not worked for most Americans, as judged by their meager income growth. The West is, indeed, threatened not only by Islamic fundamentalists, but also by China, Russia, North Korea and other authoritarian states. In comparison with today’s progressives, the Roosevelts, Truman, Kennedy and Johnson would be considered rampant nationalists.

    Reassessing free trade

    Free trade, the fundamental economic dogma of the global corporate class and its neoliberal allies, has proven, in practice, to be far less benign than “global strategists” suggest. What works for Manhattan or San Francisco has had devastating impacts in more industrially oriented places like the Midwest and much of the South. Overall, notes a recent study from the labor-backed Economic Policy Institute, trade with China has cost an estimated 3.4 million jobs so far this century.

    Commerce Secretary Wilbur Ross points out — correctly — that many leading trading partners, like the EU and China, impose higher tariffs on incoming U.S. goods than what we impose on their exports. China, in particular, seeks to gain advantage over U.S. producers, embracing what William Galston, former policy adviser to President Bill Clinton, calls “technonationalism,” under which a country seeks to extort the surrender of intellectual property in exchange for market access and cold hard cash.

    In this sense, Trump’s hard-line position on trade — and his courting of foreign investors such as Toyota and Mazda — represents a justifiable throwback to the nationalist policies framed by Alexander Hamilton, which persisted until World War II. The problem here, as elsewhere, is that Trump’s pettiness and Twitter inanities allow our trading partners to divert the discussion away from the legitimate issues around international commerce.

    Read the entire piece in 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 Dirk Dallas, via Flickr, using CC License.

  • Will Donald Trump Expose America’s Great Mass Transit Hoax?

    Whatever you think of President Trump, his claims about the lousy condition of America’s basic infrastructure are widely accepted—even by resisting Democrats grinding their teeth on a L.A. freeway or waiting for a New York or D.C. train to arrive. His call for a trillion-dollar infrastructure plan may be his last best bet for finding bipartisan support.

    The question is if he’s at all serious about the urgent need to fix the failing mass-transit systems we have, or if he’ll repeat what Washington’s done to get us in this mess, and offer funds that encourage cities to build shiny new systems few will actually ride even as the existing ones decay.

    As we’ve demonstrated in a new paper for Chapman University (PDF), nowhere is the infrastructure deficit more obvious than in urban transit, which last year lost over 3.1 percent of its ridership, according to the American Public Transit Association (PDF). Despite the vast sums spent by the federal government on light rail, subways, and trolleys since 1970, most mass transit systems fail to meet the needs of commuters.

    In many cases, as in New York and Washington, vast expenditures on new lines have occurred even as maintenance has been deferred, with overall service deteriorating. Many billions of dollars more have been spent in other cities on new rail systems that haven’t reduced the number of people driving to work.

    How the Feds Failed Legacy Cities

    Rail transit works best in what might be considered the “legacy cores.” Approximately 55 percent of America’s transit commuters have destinations in the urban cores (and many of those rides to the central business districts) of six older cities (not metropolitan areas)—New York, Washington, Boston, Philadelphia, Chicago, and San Francisco. New York, by itself, has a remarkable 56 percent of its jobs in its urban core.

    Between 2006 and 2015, those six metropolitan areas captured 77 percent of the national increase in transit work trip destinations.

    These cities were shaped when public transit held a virtual monopoly on both motorized and horse-drawn passenger transport within U.S. cities. Annual transit ridership peaked in the early 1920s, except for the period around the Second World War, the high-water mark for transit nationally. Between 1960 and 2015, transit’s work trip market share dropped more than 50 percent, from 12.1 percent to 5.2 percent. Until very recently, the demographic recovery of legacy cores, notably New York, drove a slight increase in transit share. But this progress is threatened by growing safety and reliability issues. Part of the problem stems from a decision by New York’s political elite, starting with Michael Bloomberg, to build a new, ultra-expensive line—the Second Avenue subway—while maintenance on other lines deteriorated. This decision reflects political realities including federal incentives for new systems, and the greater political rewards for building shiny new things.

    The result is that service delays in New York have skyrocketed as antiquated signals break down, with breakdowns now twice as frequently as they were just five years ago. After decades of increases, ridership has declined while the extensive commuter rail system serving Manhattan from the suburbs (the nation’s largest) is experiencing its own substantial difficulties.

    The picture is similar in Washington, D.C., where the U.S. secretary of Transportation went so far as to threaten a shutdown of the system due to fatal accidents, attributed to policies that prioritized system expansion over safety. D.C.’s transit ridership, growing for decades, has now declined as well.

    The Real Train Robbery

    Yet even as cities that depend on transit, such as New York, suffer from under-investment, Washington has poured billions into new rail system in cities created largely in the auto-dominated era. Among 19 metropolitan areas that have opened substantially new urban rail systems since 1980, the share of riders using mass transit remains below the national average while the share of those driving alone has increased.

    Nowhere is the power of ideology and entrenched interests over the common good more evident than in Los Angeles, the pioneer for the multi-polar and highly dispersed post-1950 metropolis.

    On the surface, L.A. provides the sunbelt’s best case for transit—it once had a robust transit system, is the densest urban area in the country, has a huge poverty population and ideal weather for waiting outside for the train. L.A. has been widely celebrated as “the next great transit city,” and The New York Times and others are continually celebrating its imminent conversion from a car culture to a train one. Some believers, like Los Angeles architectural critic Christopher Hawthorne, envision “a third Los Angeles” that will see the eclipse of the freeways, single family homes, and suburban neighborhoods.

    Yet despite this Manhattan envy among its elites, L.A. simply does not follow the “model” of urbanist paragons such as New York, Chicago or San Francisco. Downtown Los Angeles is a relative economic pygmy, accounting for barely 2 percent of regional employment, less than a tenth of lower Manhattan’s share. Transit works best when most commuters are headed to a dominant core destination. The more scattered the destinations, the less likely trains can muster a decent commuter share. The entire Los Angeles MTA system carries fewer riders than New York’s Lexington Avenue line.

    Money is not the issue. Since 1990, Los Angeles has opened seven new urban metro and light-rail lines and two exclusive busways at a cost of more than $15 billion. During this period, transit’s work trip market share has dropped from 5.6 percent from 5.1 percent in 2015. Ridership is at least 15 percent below 1985 levels, when there was only bus service and when Los Angeles County had about 20 percent fewer people. No surprise, then, that according to a recent USC study, the new lines have done little or nothing to lessen the area’s infamous congestion.

    Rather than hop on the rails, more residents are addressing traffic woes by simply staying home. By 2015, more Los Angeles-area residents were working at home than were taking transit. Since 1990, the number of people working at home increased eight times as rapidly as the number of people using the transit system. The number of people driving increased even more rapidly.

    This story is repeated in other sunbelt cities. In Houston, 3.2 of residents commuted to work in 2000, before the city’s $1.5 billion new light-rail system opened. In 2015, the share of commuters had dropped by a third, to 2.2 percent.

    It’s Atlanta, though, that most fully epitomizes the futility of conventional transit spending. With the opening of MARTA in 1979, Atlanta built the third largest new metro system (fully grade separated rail) in the U.S. Since then, transit share has plummeted—from 6.8 percent in 1980 to 3.1 percent in 2015, 40 percent below the average national transit market share. Traffic congestion more than doubled over the same time span.

    The most recent addition to Atlanta’s rail system is a central city streetcar line some locals have nicknamed it “a streetcar named undesirable” for its low ridership.

    Even urban planning model Portland, which opened its MAX light rail system in 1986, has seen its transit market share drop from 7.9 percent in 1980 to 6.9 percent in 2015, only modestly above the national transit-riding average. The percentage of people working at home rose from 2.3 to 6.4 percent, at virtually no cost to the public treasury, compared to the more than $3 billion to build urban rail.

    But the award for the country’s most absurd project should go to the Honolulu elevated rail line. In a metropolitan area of barely a million people, the attempt to build a 20-mile elevated train has increased in cost from $5 billion to an estimated $10 to $13 billion, with the feds chipping in $1.6 billion. The impact on state finances—for an estimated 1 percent drop in road traffic—so disturbed former Governor Ben Cayetano, a Democrat, that he’s publicly called on President Trump to cut future funding. The Honolulu Star-Advertiser recently referred to the elevated lines as an “epic fail on rail.”

    The Future of Transit

    Before President Trump or Congress tackle infrastructure, they should work to remove federal involvement in control of local transit spending. Some experts like David Levinson of the University of Minnesota, blame federal policy for distorting investment to new project that favor “ribbon-cuttings for politicians” while resulting in neglect for local operations.

    In most of the country, simply put, localities would be better off not investing in new rail schemes. Americans seem generally happy with their overwhelmingly suburban lifestyle and their ability to reach places of employment faster than most of those in the high-income world can. Today, over 75 percent of jobs are in the suburbs and exurbs combined. Between 2010 and 2015, 81 percent of job growth was in the suburbs and exurbs. Similarly 85 percent of major metropolitan area residents live outside the urban core, in the suburbs and exurbs, where transit service is sparse.

    This is not likely to change much in the near or even medium term. Rather than centralizing, the consulting firm Bain envisions evolution toward a “post-urban economy” that will be more localized and home-based. By 2025, it reports, more people could live “beyond the traditional commuting belt” than inside.

    These realities suggest that rather than the “one size fits all” model, metropolitan areas should better customize their transportation spending to local needs. To achieve this, we need to jettison the quasi-religious affection for rail transit and explore in most of the country technologically enabled solutions such as telework, which is growing faster than any form of commuting, as well as rideshare technology. This is particularly true in suburbs, such as Dublin, California, which eliminated their local bus system in exchange for providing vouchers for Uber-like services for those unable to afford or drive cars.

    Over the longer term, the autonomous car could make even more revolutionary impacts on both the urban form and transit. Automated car proponents claim that the cost of operations will be considerably below that of today’s cars. If that should be achieved, the autonomous car could be used to provide door-to-door mobility not only for the elderly and disabled, but also for people who currently cannot afford their own cars. Under any circumstances, this innovation seems certain to further weaken conventional transit outside the cities with legacy cores.

    Ultimately it will take common sense, even more than just money, to fix our transit problems. In dispersed places like southern California, Dallas-Fort Worth, and Houston, the emphasis may be on using new technologies as well as private express bus service to connect their widely dispersed communities. Monies that go into rail transit, suggest urban analyst Aaron Renn, should be focused on maintaining and improving current service in cities where they make sense. As Renn puts it succinctly: “The priority should be: repairs to existing mission critical rail lines, and helping distressed communities.”

    The current trend of wasting billions of dollars to serve a urban theology may be popular among planners, speculators and engineering firms. It hasn’t been particularly helpful to the people who need to get, in appropriate time and without too much stress, from one place to another.

    This piece originally appeared on the Daily Beast.

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

    Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

    Photo by Gage Skidmore, via Flickr, using CC License.

  • Reconciling the three Democratic parties

    With President Donald Trump’s Dr. Demento impersonation undermining his own party, the road should be open for Democrats to sweep the next election cycle. And, for the first time since their horrific defeat of 2016, not only nationally but also in the states, the Democrats are slowly waking up to the reality that they need to go beyond the ritual Trump-bashing.

    No one will compare the recently released “A Better Deal: Better Skills, Better Jobs, Better Wages” slogan to Franklin D. Roosevelt’s New Deal, or even Newt Gingrich’s “Contract for America.” One Bernie Sanders supporter called it “anodyne, focus-grouped, consultant-generated pablum.” Yet, at least it attempted to identify the party with something other than Trump hatred, which is all most Americans think the Democrats are all about.

    The three Democratic parties

    Before this new approach can work, Democrats need to decide what kind of party they are, or what coalition can bring them back into power. None of the present factions is strong enough, by themselves, to win consistently on a national basis; some accommodation between often opposing tendencies must be found. Finally, there needs to be a credible message that derives not from carefully orchestrated focus groups and surveys — the Hillary Clinton approach — but rather one that resonates with the very middle- and working-class voters that the party needs to win back.

    Since the days of Franklin D. Roosevelt, the traditional Democratic Party has combined some degree of social moderation — albeit often too timid on issues related to gays and racial minorities — with a unifying message of economic growth, national security and upward mobility. Although business interests sometimes supported them, the old Democrats primarily directed their appeal to urban, and later suburban, middle- and working-class voters.

    By the 1970s, many of these voters were headed rightward, as Democrats’ positions on social issues, defense and civil rights moved sharply to the left. Seeking to make up for some of the loss of some traditional FDR voters, Bill Clinton reoriented the party to include the rising class of information workers who were often socially liberal but fiscally conservative. But Clinton’s political genius and down-home image also helped Democrats retain some New Deal working-class support, even while forging stronger ties to tech companies, the rising professional class and Wall Street.

    The third faction, the resurgent left, led by Sen. Bernie Sanders of Vermont, grew out of the clear failure of the second Democratic Party, led by its elite wing, to address the consequences of neoliberal economics, notably increased inequality, reduced social mobility and, to some extent, environmental degradation. To these activists, the Clintonian party is not much more than a light version of mainstream Republicanism.

    Read the entire piece in 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 The Real Cloud2013, via Flickr, using CC License.