New Geography

Category: Politics

  • Americans’ Family Feud

    In this bizarrely politicized environment, even the preservation of the most basic institution of society – the family – is morphing into a divisive partisan issue. Increasingly, the two parties are divided not only along lines of economic and social philosophy, but over the primacy of traditional familialism.

    Increasingly, large portions of the progressive community are indifferent or hostile to the idea of the nuclear family, while many on the right argue that it’s key to a Republican revival. Observers such as the Weekly Standard’s Jonathan Last see familialism as key to the demographically challenged GOP. “Start a family, vote Republican,” he suggests. Long-term, Republicans can look forward to the rise of what New York Times columnist David Brooks cleverly calls “red diaper babies.”

    In the long term, the logic seems impeccable. Salt Lake City is creating a new generation of what may tend to be more conservative voters; when San Francisco’s largely single and childless populace passes, their legacy ends with them – game over. Indeed virtually all areas of the country with the fastest projected growth in households are located in red states. Houston, Atlanta and Dallas are expected to add more households than true-blue New York City, Los Angeles or Chicago. New York, California and Illinois are losing children as a share of population, while deep-red Texas, Utah, Idaho, as well as Nevada, have increased their tyke population.

    Others on the right take a more racially oriented tack. Linking lower fertility rates, particularly among Caucasians, Pat Buchanan warns of “the end of white America.” Steven Sailer, a staunchly anti-immigrant conservative theoretician, links Republican fortunes to “white fertility rates,” pointing out where whites choose to have children, particularly those who are married. George W. Bush, Sailer points out, won all 19 states with the highest rates of white fertility, as well as the 25 states where white women have been married the longest, on average.

    This politicization threatens the building of a broad consensus on how to promote the family. The related issue of America’s sagging birth rate – the lowest since the 1920s, by some measurements – should not be seen as a matter of political expediency but as an existential issue concerning the health of society and the long-term prosperity of the United States. No matter what happens with immigration, minorities are going to be a growing portion of our population and will soon represent the majority of children. Unless conservatives seek to secede and form their own Republic, they need to favor familialism among all ethnic groups.

    Yet for now, partisan concerns remain primary, and are compelling, if for narrow, political reasons. In the past two national elections, the differences in voting patterns between married couples and those who are not has become obvious. Democratic pollsters like Stan Greenberg now hail single women as “the largest progressive voting bloc in the country,” Ruy Texeira, a leading political scientist, calls singletons critical to the “emerging Democratic majority.”

    The mainstream “progressive” view on families can be seen in the “Life of Julia” slideshow produced last year by the Obama campaign and designed to appeal to single, unmarried women. In this rather pathetic portrayal, the fictional Julia is helped by federal programs from early in life. When she finally “decides to have a child,” it’s on her own, a sort of an immaculate conception since no man seems to be involved. Then, her offspring is sent off to federally funded early childhood education programs and never heard of again.

    Out of fashion

    Familialism is deeply unpopular with many in two key Democratic constituencies – greens and feminists. Many feminists have long derided the traditional family and see child-raising as something that tends to reinforce sexual stereotypes by reducing the career prospects of women.

    For their part, greens often disdain familialism since they see extra humans as a threat to the environment. The notion that depopulation, and too-rapid aging, at least in higher-income countries, could well become a greater issue than growth seems not to have sunk in, yet. Instead, people like Lisa Hymas, with the environmentalist website Grist, suggest that the “childfree” are something of a persecuted group that are in need of more societal understanding. Environmentalists also tend to be in favor of slow economic growth, which, in turn, tends to further depress birth rates.

    These worldviews represent a break from the progressive politics of the entire era stretching from Teddy Roosevelt to Bill Clinton. In the past, the basic emphasis has been to make families stronger by backing such institutions as public schools and parks, as well as creating the basis for broad-based economic growth. Support for single-family homes that most families require was part of this.

    But today, many “progressives” disdain the suburbs, which were built largely with the help of New Deal and successor programs. Now, most planners, according to the American Planning Association survey, believe accommodating families is simply not worth the cost of the services, notably schools, that they engender.

    Rather than looking at housing that fits families, many progressives now want to promote an urbanism that has little place for families. Some real estate sites, such as Estately, rank cities not by being child-friendly, but those most accommodating to the “childfree” – reminds me of gluten-free – a term which for some reason is deemed preferable to childless. Virtually all cities so ranked, such as ultralow-fertility San Francisco, Portland, Seattle, New York and Madison, Wis., are all places that increasingly are Republican-free as well.

    Most still want kids

    Since most people, including millennials, likely will choose to have children – and settle in suburbs – embracing familialism does offer an opportunity for conservatives and Republicans. Most millennials, note generational chroniclers Morley Winograd and Mike Hais, place high priority on being good parents and having a strong marriage.

    The potential political benefit, however, is being squandered by profamily activists who tend to focus on a Manichean worldview that sees anything other than traditional arrangements as inimical to core religious values about what is defined as a “natural family.” Rather than try to accommodate modernity, many family activists contend, as one leader told me, that we need to “march back to the ’50s.”

    Unfortunately for more hard-line social conservatives, history may go in waves, with each shift engendering a reaction, but it does not generally go backward. To remain relevant, and not to, so to speak, throw the baby out with the bathwater, some agenda items need to be laid aside. This is particularly true on issues such as gay marriage, where millennial opinion is shifting toward ever-greater acceptance, with roughly two in three in favor. By forcing allegiance to increasingly unpopular views, social conservatives are in danger of losing touch with the next generation.

    At the same time, many conservatives are so wedded to the market economy as to ignore the negative pressures on family formation imposed by our relentlessly competitive society. Some thought has to be given to mechanisms – such as free or subsidized child care and extended parental leave – that might make it easier for young families to survive, particularly in tough economic times. Conservatives, if they value family, should look at ways to support them, even if, sometimes, it’s done through government.

    In the end, the issue of family is too important to leave to the mercilessness of narrow partisan political forces. The country – and its future generations – needs both parties to focus not just on pro-family rhetoric, but on how we can make it easier for young people both to create, and nurture, the next generation.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    This piece originally appeared at The Orange County Register.

    Baby photo by Bigstock.

  • Suburb Hating is Anti-Child

    Sure, suburbs have big problems. Their designs force their inhabitants to drive in cars, instead of walking and bicycling. This diminishes face-to-face interactions, physical health, and the quality of the environment. Aesthetically, many of them, particularly those dreaded “planned communities,” are quite boring. People who live there tend not to have much contact with people who aren’t like them, so suburbs reinforce racial, religious, and class segregation.

    A large proportion of intellectuals and politicians, including President Obama, decry these problems with suburbs as reason to hate them and advocate for their elimination, in favor of dense, big cities.

    Yeah, I get it. I agree that all these problems exist, and they bother me a lot.

    There’s just one big problem with suburb hating. The alternative to suburbs in metropolitan areas, cities, are much worse for children. Sure, adults can have a great time in hip, dense city centers like Manhattan or San Francisco. In fact, if my wife and I never had kids, we’d still be living in San Francisco, going out practically every night.

    However, it’s clear that cities are worse for kids than suburbs.

    Why do I say this?

    First, just look at where newly married urbanites choose to live once they have children. They leave cities in droves. The hipper and denser the city, the more likely are parents to flee to the suburbs.

    20-29_table

    Richard Florida made his name over a decade ago writing about how cities should attract the “creative class” – a code name for childless urban hipsters. In his book, Who’s Your City?: How the Creative Economy Is Making Where to Live the Most Important Decision of Your Life, he lists cities he thinks are best for different groups of people. The table here shows the percentage of total population in the United States that is school-aged children (age 5-17) versus that for large cities that Florida lists as best for 20-29 year-olds.

    The only two cities that are even close to the national average of 17.5% are Los Angeles and New York. Los Angeles covers an awful lot of land area, and I suspect that if I could get data for what Florida really means by “Los Angeles,” the percentage would be much lower.

    NYC_boroughs

    New York is also quite large and diverse, but there, fortunately, I have data for what Florida really means by “New York.” I’m sure he’s thinking of Manhattan when he thinks of “creative class.” There, as you can see on the table here, Manhattan’s percentage of the population that is school-aged is 11.8%, far below the national average.

    In her suburb-hating book, The End of the Suburbs: Where the American Dream Is Moving, Leigh Gallagher gushes that Manhattan “has become overloaded with families.” To back up this assertion, she points to US Census data that there were 2,600 more married families with children 0-18 in 2010 than in 2000. Actually, that’s unimpressive for two reasons. First, the census data show that Manhattan’s total population actually increased by more than the population of children, so children as a percentage of the total population actually dropped. Second, even if the percentage of children had increased, the 11.8% figure for school-aged children is horrifically low.

    The New York Times contributed to this gushing sentiment for children in Manhattan in a 2005 article. It pointed to a small surge in children under 5 in Manhattan’ census data between 2000 and 2004. Unfortunately, this trend did not extend to school-aged kids.

    This disparity hints at the major reason why families leave big cities: public schools in large cities are, by and large, awful. So, for the most part, families that have the means to move out of cities when their children reach school age flee to the ‘burbs. Most middle and upper-middle class families that do stay send their children to private schools. 30% of San Francisco children go to private schools, and my guess is that the figure for Manhattan and other dense, hip urban centers is close to that.

    So, to some extent, when you hear people complain that cities are too expensive for families, they are calculating private school into the cost of living there.

    But private schools not only cost a lot of money. They also destroy neighborhood life for children. In big city neighborhoods where many or most children go to private schools, children who live on the same street hardly know each other because they tend to go to different schools that their parents choose.

    Beyond running bad schools that force families with the means to go to private school, some big city school systems put the final dagger into neighborhoods by forcing or enticing children to go to a school outside their neighborhoods.

    For example, San Francisco has done this for decades in an effort to forcibly integrate students of different races and backgrounds, but instead, what it’s done is destroy neighborhoods and push more families into private schools than any other city in America. In the last year or two, that city has made a small change in its policy in an apparent effort to make it more possible for children to go to school in their own neighborhood, but this change hasn’t gone nearly far enough to pull neighborhoods together.

    So, big cities are left with neighborhoods where children spray out to all parts of the city to go to school every day. When school’s over at the end of the day, playing in their neighborhoods isn’t an option because children there don’t know one another.

    The families that do flee for the suburbs leave a diverse place where parents like them have a small amount of political power and huge teachers’ unions dominate, to a more homogeneous place where most residents are like them, in terms of socio-economic status, and parents wield great power over schools. Left behind are the less fortunate kids, with their families.

    The other primary problem that families have with cities is space. Yes, while it’s trendy these days for urban planners to advocate for dense development, families with children flee from density. Every large city in the United States that has high density – including those in the Richard Florida list above and other dense cities like Miami and Philadelphia – have very low percentages of school-aged children.

    To put it simply, play requires space. If all kids have outside their crowded apartment building is a sidewalk, they can’t play a game of soccer, nor can they play even less formal games like hide and seek or tag. Also, sidewalks are a lot less complex, and therefore they’re a lot more boring for kids, than yards that have grass and bushes with hiding spaces.

    As Richard Louv writes so eloquently in his book Last Child in the Woods, children really do love being in nature. They’re drawn to play among trees, bushes, grass, and creeks rather than sidewalks and brick walls.

    Those who tout the attractiveness of city life for children always cite the importance of public parks. Parks are great for families that live right next to them, but unfortunately, we’re never going to put a park in every other block. The fact is that children don’t roam very far on their own these days. In fact, most preteen children don’t roam on their own more than a few feet from their front doors, whether those front doors are to their single family homes or to their apartment buildings. So, parks are of very limited use, even to most city dwellers. While kids and caregivers go there together, kids hardly every go there on their own to play freely.

    Clearly, children can get a great deal of value from a yard outside a single family home, which is one important reason why so many families aim to move to the suburbs. Yes, most families don’t exploit their yards nearly enough once they move there, but that’s a problem with how families live in suburbs. It’s not a blanket condemnation of suburbs.

    So, we need to fix suburbs and the way families utilize them. They should be far more pedestrian friendly, and not favor cars so much. Residential yards should be used as social hangouts, not merely admired from afar for their manicured shrubs and flower beds. I’ve written a great deal about these fixes on my blog and in my book Playborhood.

    But what we shouldn’t do is try to force families to live in dense city centers. Most families don’t like it there, with good reason.

    Suburb hating hurts children. Politicians who advocate anti-suburb policies are hurting children. They are, dare I say, anti-child.

    Mike Lanza is author of the parenting book Playborhood: Turn Your Neighborhood Into a Place For Play, and blogs at Playborhood.com.

    Suburbs photo by Bigstock.

  • Swedish Lessons for Obama

    During his upcoming visit to Sweden, President Barack Obama will surely praise the nation’s combination of high living standards, few social problems, and high level of income equality. What he may not recognize — although he should — is that the astonishing social and economic outcomes in Sweden and other Nordic countries have more to do with a unique culture among homogenous populations than with simply following a recipe of social democratic policies.

    Sweden long has been admired by US intellectuals, particularly on the left. In 1976 Time Magazine described Sweden as a “country whose very name has become a synonym for a materialist paradise… No slums disfigure their cities, their air and water are largely pollution free… Neither ill‑health, unemployment nor old age pose the terror of financial hardship.” The praise has continued since then. Recently even Bruce Springsteen joined those in favor of the US adopting a Swedish style welfare state. The success of Nordic nations is often seen as the proof that large welfare states lead to good outcomes. Paul Krugman for example writes: “Every time I read someone talking about the ‘collapsing welfare states of Europe’, I have this urge to take that person on a forced walking tour of Stockholm.”

    A walk through Sweden’s history however paints a more nuanced perspective than the one Krugman and other praise-givers might suggest. Around 1870 the previously poor country could begin its route to prosperity, thanks to comprehensive market reforms. Between 1870 and 1936, the start of the social democratic era, the country had the highest growth rate in the industrialised world. Between 1936 and 2008, a period when Sweden was mainly controlled by the Social Democrats, the growth rate was only ranked 18th out of 28 industrialised nations. Also, it is vital to remember that the social democrats were initially highly pragmatic. Small government policies continued until the social democrats radicalized in the late 1960s.

    Sweden’s phenomenal growth can, besides business friendly policies, has much to do with the country’s unique history. Nordic countries were for a long period dominated by independent farmers who had great incentives to work hard in order to survive in the harsh and cold climate. The populations in these homogenous countries not only adapted very strong ethics relating to work and responsibility, but their culture also became characterized by social cohesion and high levels of trust.

    Early welfare state institutions, not least a public school system open for all social classes that emphasized discipline and academic knowledge, indeed promoted social mobility. It is vital to realize that the high level of income equality for which Sweden is envied for developed when the nation had relatively small welfare state. The rise of high tax policies occurred after Sweden had already grown equal.

    The cultural attributes that explain Nordic success work well also in the US, at least amongst the nation’s Nordic population. Today we can see that descendants of Scandinavians who live in the US (whose fore-fathers left well before the development of social democratic policies) have the highest levels of trust in the US. Americans of Swedish origin have the same poverty level as Swedes in their native country. The Americans however earn some 50 percent higher incomes than the latter.

    The period for which Sweden has been most envied by the US left is the massive state expansion that occurred mainly during the period following the second world war, a period when the tax rate increased by almost one percentage point annually over three decades. In particular the left is fascinated by the “third way policies”, a mix between capitalism and socialism, which followed radicalization of previously pragmatic social democrats in the late 1960s. This period, characterized by massive state involvement and effective marginal tax rates of sometimes 100 percent, was however anything but successful. Previously Sweden had thrived due to birth of new entrepreneurial firms, a phenomenon that almost stopped in 1970 and did not again start until significant market reforms where introduced during the 1990s and early 2000s.

    During recent decades the levels of economic liberty have again increased strongly in the Nordic countries (Norway, leaning on its oil-wealth, is somewhat slow to reform). The Nordic nations compensate for their high taxes and regulated labour markets by having introduced high levels of economic liberty in a wide range of other fields. Recently, even the taxes have been reformed. In 2000 total tax revenues in Sweden were over 51 percent of GDP. The level decreased somewhat during the following years of social democratic rule, to 48 percent in 2006. The current centre-right government has reduced them to 44 percent and is currently introducing new reductions of the tax burden.

    Rather than expand their welfare states, Nordic nations are again returning to the free market roots that have served them so well historically. This is perhaps an important lesson for Obama, Springsteen and Krugman, to ponder. There are indeed many smart elements in the Swedish welfare state, and the welfare states of other Nordic countries, that deserve admiration. An example is how public child care has encouraged women’s entry into the labor market. Another is Danish flexicurity that combines public safety nets with a liberal labour market. A third is partial privatization of social security in Sweden. A fourth — often ignored —  is the country’s dedication to fiscal conservatism even under the Social Democrats.

    There are also many areas in which some Nordic nations fail whilst others do significantly better. Norway continues to rely on systems with very generous public benefits, which deteriorate the work ethic. The other nations, which cannot rely on oil wealth, have learned their lesson and work towards strengthening incentives for work and entrepreneurship. Finland has kept a school system that is, thanks to academic discipline and knowledgeable teachers, able to educate well those who do not come from academic or middle-class families. Sadly, Swedish public schools, have, much like their US counterparts, moved towards progressive ideas and deterioration in teacher’s knowledge. The result is an inability to stimulate those who are not intrinsically motivated to learn to do so. Overall the Nordic nations also fail at integrating foreign-born, even those who come with higher education.  

    There is simply much to learn from Nordic nations. They have experimented with everything from implementing Milton Friedman’s idea of vouchers in welfare to implementing gender quotas in corporate boards. But aside from benefitting from the unusually strong norms related to work, trust and cooperation, Nordic societies are no exception to the rules of politics and economics. The same policies that hinder growth in the US (high taxes, lack of infrastructure, failing school policies) limit societal success in Scandinavia, whilst steps to encourage innovation, entrepreneurship, and work are proven to work equally well in both sides of the Atlantic.  

    Dr. Nima Sanandaji is a Swedish author of Kurdish-Iranian origin. He has written numerous books and reports about issues such as entrepreneurship, women’s career opportunities, integration, and welfare. Nima is the author of reports "The Swedish Model Reassessed" for Finnish think-tank Libera and "The surprising ingredients of Swedish success” for the Institute of Economic Affairs. Currently he is working on a book about the unique economic and cultural success of both the Nordic nations and the “new Nordic” countries in the Baltics.

  • Root Causes of Detroit’s Decline Should Not Go Ignored

    Recently Detroit, under orders from a state-appointed emergency manager, became the largest U.S. city to go bankrupt. This stirred predictable media speculation about why the city, which at 1.8 million was once America’s 5th-largest, declined in the first place. Much of the coverage simply listed Detroit’s longtime problems rather than explaining their causes. For example a Huffington Post article asserted that it was because of “racial strife,” the loss of “good-paying [sic] assembly line jobs,” and a population who fled “to pursue new dreams in the suburbs.” Paul Krugman, who has increasingly become America’s dean of misguided thinking, downplayed the city’s pension obligations, instead blaming “job sprawl” and “market forces.” The implication is that Detroit’s problem just arose organically from structural economic changes, and within decades somehow produced a city of abandoned homes and unlit streets.

    But a closer look suggests that Detroit’s problems, which include 16% unemployment, 36% poverty, and 60% population decline, were self-inflicted by a half-century of government excess. Thomas Sowell nicknamed this excessiveness the “Detroit Pattern”, and defined it as the city’s habit for “increasing taxes, harassing businesses, and pandering to unions.” These three problems have proven as instrumental to decline as the “Big Three” automakers once were to Detroit’s rise. Analyzing their background, and potential for reform, could expedite the city’s turnaround.

    The foremost measure would be addressing taxes. Currently Detroit has one of America’s largest tax burdens for major cities, offering notoriously bad services in return (police response times average 58 minutes, and 40% of streetlights do not work). Its property tax rates are the nation’s highest, exceeding 4% for some buildings. This has caused particular disinvestment in the city’s large stock of abandoned homes, some of which sell for below $1000, but are avoided since they get assessed at far above their actual worth, leaving owners with inflated tabs.

    Detroit could also help its cause with a business climate that better encouraged entrepreneurship. For decades it has done the opposite, championing a growth policy that mirrored the city’s overly-centralized private sector. It has gambled—with tax breaks, subsidies, and extensive eminent domain—on stadiums, casinos, office towers, factories, and a downtown monorail, only to find that these didn’t produce nearly the anticipated benefits. Meanwhile it has squelched small businesses, which are generally better at creating jobs, with a cobweb of protectionist regulations—on food trucks, taxis, movie theaters, and so on. This was summarized in economist Dean Stansel’s recent “economic freedom” study, which ranked the regulatory and tax climates of U.S. metro areas. In a field of 384, Detroit placed 345th.

    These regulations have emanated from Detroit’s vast, union-controlled public bureaucracy. Recent debate about this bureaucracy has focused on retirement benefits, which apologists note are far less generous than in other big cities. But this does not detract from the sheer number of retirees, which at 20,000 are nearly twice Detroit’s existing public workforce, and account for obligations of potentially half the city’s $18 billion debt.

    Less discussed is the way unions protect existing workers also, by stifling needed service reforms. When a philanthropist offered $200 million in 1999 to open the city’s first charter school, which would require changes to state law, the Detroit Federation of Teachers organized a work stoppage to protest in Lansing, ultimately causing withdraw of the donation. Various other city unions (which total 47) have resisted reduction or privatization of water utilities, trash-pickup, street lighting, and transportation. This is despite the city having proven wildly incompetent at providing these services itself, a point made recently in the Wall Street Journal by a former transportation chief. He claimed that unionization of the 1,400-employee DDOT had ensured worker protections for rampant absenteeism and poor performance, thus creating a climate in which 20% of scheduled buses did not arrive. Similar protections from firings and layoffs existed in other city departments, he wrote, perhaps explaining why Detroit, at over 10,000 workers, remains one of the most overstaffed big cities in America, while managing to do so little with them.

    Of course many would argue that Detroit’s post-World War II racial conflicts were the real reasons for decline. More plausible is that these conflicts were inflamed by that era’s top-down government policies, which became all the worse when enforced by seemingly prejudiced officials. Throughout the 1950s and 1960s white mayors steamrolled roadways through functioning black neighborhoods like Black Bottom, and housed the displaced in dangerous, high-rise government projects. Funding for this and other “urban renewal” came from federal programs like President Johnson’s Model Cities, and using Detroit as a flagship, was meant to modernize aging urban communities. But the programs instead fragmented them, including a Detroit black population that, according to Sowell, then had 3.4% unemployment and “the highest rate of home-ownership of any black urban population in the country.” For them this “renewal” created a housing shortage, and along with discrimination and police brutality, inspired riots in 1967.

    These riots killed dozens, injured nearly 1,200, and along with the ones inspired by Martin Luther King’s assassination, immediately spurred a mass white exodus. This cemented the demographic changes needed for both the 1973 election of Detroit’s first black mayor, Coleman Young, and subsequent policies that instead targeted the city’s whites. A paper by economist Edward Glaeser argues that this was done intentionally by Young as a way to further drive political rivals to the suburbs, and increase the share of his poor black voting base. He did this, writes Glaeser, by cutting off services in white neighborhoods, imposing onerous taxes, and displacing thousands of Polish households for a GM factory in the Poletown neighborhood. This led to further white exodus and diminishment of the tax base.

    All these are examples of rampant abuses, under both black and white leadership, that have resulted because of Detroit’s notorious governing “pattern.” But one silver lining of its bankruptcy is the opportunity for structural change. This could occur by channeling the urban reforms—from charter schools, to defined-contribution pensions, to looser permitting, to plain-old lower taxes—that have helped other U.S. cities the last two decades. If these reforms can thrive in the Motor City than they probably can anywhere, turning it at the very least back into a functioning city, and at best into a reemerging economic star.

    Scott Beyer is traveling the nation to write a book about revitalizing U.S. cities. His blog, Big City Sparkplug, features the latest in urban news. Originally from Charlottesville, VA, he is now living in different cities month-to-month to write new chapters.

    Photo by Kate Sumbler.

  • America Hanging in There Better Than Rivals

    To paraphrase the great polemicist Thomas Paine, these are times that try the souls of optimists. The country is shuffling through a very weak recovery, and public opinion remains distinctly negative, with nearly half of Americans saying China has already leapfrogged us and nearly 60 percent convinced the country is headed in the wrong direction. Belief in the political leadership of both parties stands at record lows, not surprisingly, since we are experiencing what may be remembered as the worst period of presidential leadership, under both parties, since the pre-Civil War days of Franklin Pierce and James Buchanan.

    Yet, despite the many challenges facing the United States, this country remains, by far, the best-favored part of the world, and is likely to become more so in the decade ahead. The reasons lie in the fundamentals: natural resources, technological excellence, a budding manufacturing recovery and, most important, healthier demographics. The rest of the world is not likely to cheer us on, since they now have a generally lower opinion of us than in 2009; apparently the "bounce" we got from electing our articulate, handsome, biracial Nobel laureate president is clearly, as Pew suggests, "a thing of the past."

    But as the Romans used to say, don’t let the bastards get you down. After all, it’s not like our competitors are stealing the march on us. Start with Europe. Just a few years ago, writers like Jeremy Rifkin and Steven Hill were telling us that Europe was the "model" for the world. Expand the welfare state, curtail capitalist excess, provide a comfortable partner to the rising nations of the world, and, well, enjoy a long and comfortable early retirement.

    Now, that early retirement is quickly turning into a kind of senility. Not only is Europe continuing to age – particularly along its Southern rim – but the fiscal pressures of ultrahigh unemployment, approaching 30 percent or above, among the young and the costs of maintaining a strong welfare state could create what urban analyst Aaron Renn has labeled "a demographic Lehman Brothers."

    At the same time the near-collapse of the Southern-rim countries threatens the viability of Europe’s banks, including those in Germany. Increasingly, Germany lives largely so the rest of Europe can die more quickly. Like a prototypical science-fiction villain, Germany – with fewer children than it had in 1900 – relies increasingly on the blood taken from the decaying Southern rim countries. By 2025, Germany’s economy will need 6 million additional workers, likely from such countries as Spain, Italy, Greece and Portugal, to keep its economic engine humming, according to government estimates.

    Asian anemia

    What about our prime Asian competitors? Japan has been the sick man of Asia for more than two decades. It’s now desperate enough to unleash Bernanke-like money-printing policies to supply some desperately needed economic Viagra. With a weaker currency, and more money from the Tokyo exchange, there could be a temporary recovery, but Japan’s long term prognosis is not good.

    What Japan really needs is more animal spirits – particularly the kind that produce offspring. By 2050, according to UN estimates, Japan will have 3.7 times as many people at least age 65 than 15 and younger. By then, there will be 10 percent more Japanese over 80 than under 15. Without an unlikely embrace of immigration, Japan is destined to become the nation in wheelchairs.

    China poses a more serious challenge, but the Middle Kingdom appears headed toward what one analyst calls "the end" of its amazing and profound economic miracle. Growth, once projecting Chinese global preeminence, is slowing precipitously. The country now faces a growing rank of competitors from lower-wage countries poised to take market share from the Middle Kingdom.

    China faces growing political instability at the grass-roots level, a mountain of state-issued bad debt and a festering environmental crisis, which threatens long-term food supplies and could create massive health problems. China is rapidly aging. It will have 60 million fewer people under age 15 by 2050, while gaining nearly 190 million people at least 65, approximately the population of Pakistan, the world’s fourth-most populous country.

    The so-called BRICS (Brazil, Russia, India, China and South Africa), once the darlings of the investment banking set, all are facing slowing growth and rising political instability. It doesn’t help that most are either total or partial kleptocracies, dependent on commodity exports or cheap labor. This is not a solid foundation for ascendency as newer emerging nations – Myanmar, Indonesia, Vietnam – ramp up.

    ENERGY SHIFT

    On all these accounts, North America, including our Canadian and Mexican neighbors, looks best-positioned. The first, and, arguably, most important game-changer is the energy revolution that could realign the economic stars for decades to come. The shale oil and natural gas boom, as the Economist recently noted, is as illustrative of America’s future, and genius at reinvention, "as the algorithms being generated in Silicon Valley."

    The energy boom’s best aspect, besides the emergence of relatively cleaner natural gas, is making global tyrants, such as those ruling Saudi Arabia and Russia, nervous about their future place in the world. These worries alone should send a three-word message to our leaders: Go for it.

    But North America is not, like Russia, a one-trick pony. The U.S. remains the world’s leading food producer and exporter, sending out more of such critical commodities as soybeans, corn and wheat than any other country. After decades of decline, the U.S. industrial base is growing again, and, although job growth is likely to be limited, our manufacturing sector is already the most productive in the world. With the advantages of a decent legal order, a huge domestic market and available workforce, the U.S. has remained the largest recipient of foreign investment on the planet, roughly five times that so far accumulated in China.

    Technology can be a fickle industry, but at this point of the game, it’s fair to say the U.S. is winning that race. As potentially dangerous as the tech giants may become over time, the U.S. dominance in everything from software code (Microsoft) and design (Apple), search (Google), e-retailing (Amazon), and social networking (Facebook) is nothing short of astounding. We even lead in the coffee business (Starbucks) that keeps all those nerds typing code late into the night.

    Cultural influence

    Then there’s the matter of culture. For years, Asian, Third World and European cultural warriors have plotted to knock the U.S. off its pre-eminent perch. But the European film industry is a shadow of its once-glorious efflorescence; much the same can be said about the once-splendid Japanese cinema. To be sure, Chinese films, Korean pop stars and Bollywood are rising forces, but U.S. exports more than $14 billion annually in film and television. On a global level, no one can compete with Hollywood as a packager of images and dreams – and Silicon Valley’s control of new distribution technology could further boost this advantage.

    Finally, there’s the matter of demographics. The United States, like its competitors, is aging, but not as quickly as our prime rivals. The birth rate has slowed with the recession, but it’s likely to come back toward replacement levels in the years ahead as millennials enter their thirties en masse, and immigrants continue coming to the country. America should be the only one of the top five economies with a growing workforce over the next few decades.

    So, if things are so good, why do they seem so bad? Sixteen years of lackluster leadership has not helped – a succession of two spendthrift presidents, one a too-happy warrior with a weak sense of the limits of even an imperial power, and the other, a posturing and arrogant academic oddly disconnected from the fundamental grass-roots drive that moves his country’s economy. Yet I prefer to see it in a more positive light: If we can do better than our major competitors under such leadership, how great a country is this?

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    This piece originally appeared at The Orange County Register.

    USA map image by BigStockPhoto.

  • What Detroit Has Really Taught America

    Nothing. Seriously. Not a damn thing.

    Oh, the occasion is being used to opine on our state of affairs, but nothing is structurally taking shape in America to prevent the next Detroit from occurring. In fact, Detroit is occurring every day inside most of us. We are all getting bankrupt in so many little ways.

    America is in a precarious position. Our economy is based on consumption. Our consumption is based on our livelihood. Our livelihood is based on our employment, and in our jobless “recovery”, there just aren’t many decent jobs. With technological advances, it is likely to get worse. Writes columnist Bill McClellan in the St. Louis Dispatch:

    [T]he day is coming when trucks will drive themselves. People in the trucking industry say it is inevitable. Within a decade or so, truck drivers will be obsolete. There are currently 5.7 million truck drivers.

    McLellan continues, discussing an email he received from a reader:

    Pat B. is a conservative businessman. He wrote, “Regarding the truck drivers, I think the bigger issue is how society is going to deal with nonproductive people vs. productive people. Automation will allow ‘productive’ people to be much, much more productive than the ‘nonproductive’ people. Theoretically, a very small segment of the population could produce almost everything. How will we deal with this?”

    Good question. Currently, Detroit is ground zero of it. So much busted there, so many poor, so many with blue- and white-collar skills in the new no-collar economy. Do we let the city die on the vine? Au revoir Rust Belt?

    Well, a consensus is becoming clear. We need to “First World” Detroit. Get it and other post-industrial cities on the right path.

    Enter New York.

    Courtesy of Smithsonian

    In the late 1970′s, New York City was in trouble: the threat of bankruptcy, and the Bronx was on fire, literally, with broadcaster Howard Cosell famously being attributed to saying “There it is ladies and gentleman, The Bronx is burning” as cameras panned to a fire in an abandoned elementary school during Game 2 of the 1977 World Series. Put simply, the 1970’s NYC was not unlike the modern day Detroit—insolvent fiscally, aesthetically, and, in many respects, sociologically. “Broken youth stumbling into the home of broken age,” wrote Frank Rose in the Village Voice.

    But with crisis comes opportunity, particularly for those who can afford to be opportunistic. Specifically, in the book by Paul Harvey entitled The Brief History of Neoliberalism, the crossroads of NYC’s late-70’s fiscal crisis gets center stage. Here, the groundwork for the city’s co-optation had been laid for some time, with the 1960’s urban crisis increasing municipal desperation. Financial institutions smelled blood, and they saw occasion. What happened dictates urban redevelopment to this day. Writes Harvey (h/t Cleveland Frowns):

    At first financial institutions were prepared to bridge the gap, but in 1975 a powerful cabal of investment bankers (led by Walter Wriston of Citibank) refused to roll over the debt and pushed the city into technical bankruptcy. The bail-out that followed entailed the construction of new institutions that took over the management of the city budget.

    Harvey states that the new budget strategy amounted to “a coup by the financial institutions against the democratically elected government”, one that would subsequently de-emphasize social and physical infrastructure for the priority of a “good business climate”. Harvey continues:

    But the New York investment bankers did not walk away from the city. They seized the opportunity to restructure it in ways that suited their agenda…This meant using public resources to build appropriate infrastructures for business…coupled with subsidies and tax incentives for capitalist enterprises…[T]he investment bankers reconstructed the city economy around financial activities, ancillary services such as legal services and the media…and diversified consumerism (with gentrification and neighborhood ‘restoration’ playing a prominent and profitable role). City government was more and more construed as entrepreneurial rather than a social democratic or even managerial entity.

    Fast forward to now and you can see how this framework has made modern day New York. A billionaire mayor. Impressive wealth accumulation. Lower crime. Gentrifying areas that are spreading into many parts of the city. The scene in the Bronx:

    The South Bronx is on the upswing and this new project proves it,” said Kathy Zamechansky, President of KZA Realty Group. “A gleaming new building is just what this area needs to add life and vitality to a neighborhood…

    All good, right?

    Not exactly. Commoditizing public welfare has come with very personal costs. Particularly, New York City’s economic sphere epitomizes the worsening two-tier system in America, with one study finding that “three of the four most [income] segregated metropolitan areas [in the country] are in the New York City region”. In the city itself, the income disparity rates from subway stop to subway stop are at Namibian levels. “Get off at Chambers St., and you’re averaging $205,192,” writes Fishbowl NY. “Hop off at Kingsbridge Rd., and you’re at $18,610”.

    Income Disparity New York

    There is cost to personal freedom as well, with Mayor Bloomberg’s “stop-and-frisk” tactics ruled as a violation to the constitutional rights of minorities. The increase in police stops have been significant since Bloomberg took office, going from 160,851 in 2003 to 685,724 in 2011. In a 195-page response just released, the federal judge wrote: “No one should live in fear of being stopped whenever he leaves his home to go about the activities of daily life”.

    Heck, there’s even consternation from the city’s creative types. Specifically, New York’s legacy of nurturing the next generation of thought is being homogenized by the fact that elites talking to elites creates for shitty cultural capital. Writes Gawker’s Hamiliton Nolan on how the influx of money is turning the city into “a game of urban Candy Crush”, “Everything is an orgy of destruction! Who’s hip now? Nobody!” Echoes creative class troubadour Lena Dunham:

    It’s news to no one that the middle class and up-and-coming talent struggle in this city. As a result, New York is seeing an exodus of its creative population. As Dunham says, “If they struggle for too long, they’re leaving New York for Seattle, Chicago, Austin, and in some cases, even Tampa. We can’t have our generation’s Patti Smith moving to Tampa. That’s going to seriously f*ck our shit up.

    But the bridge had been crossed. Not simply for the reasons Dunham fingers, but because New York City is the head of a teetering set of bones. Writes eminent economic scholar Joseph Stiglitz in a recent essay entitled “The Wrong Lesson from Detroit’s Bankruptcy”:

    Rather than deal purposefully with this changing economic landscape with useful policies encouraging the growth of other industries, our government spent decades papering over the growing weaknesses by allowing the financial sector to run amok, creating “growth” based on bubbles. We didn’t just let the market run its course. We made an active choice to embrace short-term profits and large-scale inefficiency.

    America does have an urban renewal program, but it is aimed more at restoring buildings and gentrification than at maintaining and restoring communities, and even at that, it is languishing.

    Which brings us back to Detroit. Consider it America’s “Back to the Future” moment. There is municipal bankruptcy. There is fiscal management being taken away from an elected government. There are financial institutions wreaking havoc on the middle class via a collective Alfred E. Neuman-like exasperation. There is the subsidy environment going full bore in the midst of economic trauma, with the Governor of Michigan giving the okay to Detroit billionaire Mitch Ilitch on his $650 million dollar publicly-subsidized hockey arena one day after signing off on the country’s largest city bankruptcy filing. And then there’s the gentrification-as-economic-development silver bullet, with real estate developer Dan Gilbert buying up downtown properties for the price of a song and then using the spatial grease of placemaking to fill his square feet with the rise of the creative class. “Stand up and gentrify: 7 days in Detroit” reads a series running in the The Windsor Star.


    “It was a face that didn’t have a care in the world, except mischief.” Quote from Mad editor Harvey Kurtzman.

    Taken together, the framework of Detroit’s progression is to simply go forth into who we are as a country—a group of people on a collision course with the inevitable failings of economic disparity, or more generally: a nation without good jobs.

    Should Detroiters be worried?

    Maybe. Reads the New York Observer: “Bloomberg Warns the Next Mayor Could Follow Detroit Into Bankruptcy”.

    Back to the future indeed.

    Richey Piiparinen is a writer and policy researcher based in Cleveland. He is co-editor of Rust Belt Chic: The Cleveland Anthology. Read more from him at his blog and at Rust Belt Chic.

    Lead photo courtesy of Vice.

  • Young Tech Tycoons Pushing Left Coast Ahead Of East In Democratic Power Structure

    There are two deep-blue regions that are critical to the Obama administration: the Northeast and the coastal region between San Jose and Seattle that truly deserves the moniker of the Left Coast. They dominate the Democratic donor list, and provide the administration with most of its appointees and much of its ideological moorings.

    Yet this common ground conceals a shift in the balance of power between these two blue strongholds. The power of the high-tech heavy Left Coast is waxing while the old Boston-to-Washington corridor is waning. Jeff Bezos’ purchase of The Washington Post simply confirms this movement of the political tectonic plates.

    The Rise of the Tech Oligarchs

    Wall Street was the star of the 1980s, but today, it’s the tech industry that offers “the same heady mix of mystery, power and money,” as Om Malik puts it. The Left Coast’s ascendency is based largely on its increased domination of this critical sector. Thirty years ago, East Coast giants such as ITT and Eastman Kodak ranked among the largest tech firms, with little representation from the Left Coast. Today the region accounts for seven of the top 10 tech companies.

    The Left Coast is also home to four of the world’s top seven software companies. The software for most of the world’s computers comes from either Microsoft in Seattle or Google and Apple in the Bay Area. Search is almost completely dominated by Google, social media by Facebook. Bezos’ Amazon overwhelms its e-tailing competitors.

    This has generated an enormous shift in the geography of American wealth. In 1990 most of the richest Americans lived in the Northeast or were part of the old energy/agriculture economy in the middle of the country. Today five of the nation’s 15 wealthiest people reside in the Bay Area or the Puget Sound; only two, Michael Bloomberg and George Soros, come from Wall Street. More importantly, the Left Coast oligarchs tend to be much younger than their East Coast counterparts; six of the world’s 29 billionaires under 40 hail from the Left Coast, three from Wall Street.

    Seizing the Means of Communications

    The best historical analogy can be found at the turn of the 20th century as entrepreneurs from America’s industrial expansion — John D. Rockefeller, Andrew Carnegie, E.H. Harriman and JP Morgan — moved to influence government and politics, first by buying political influence and later through foundations. Many of the great newspaper tycoons of the time, for example William Randolph Hearst, heir of a great Colorado mining fortune, also used their money in influence mass opinion, a pattern repeated, ironically in 1933, when Wall Street financier Eugene Meyer bought the moribund Washington Post, greatly enhancing his family’s influence for decades.

    But these newbies come with an extra media advantage: they dominate virtually all the emerging transmission systems for information. Google, Apple and Facebook all are emerging as major disseminators of entertainment as well. This shift promises to inflict collateral damage on both Hollywood and the Manhattan-centered advertising industry. The recent shotgun merger of Omnicom and Plublicis reflects the weakened position of traditional ad firms at a time that Google alone has more ad revenues than the entire print publishing industry combined.

    Reshaping the Political Landscape

    Once largely divorced or distant from politics, the Left Coasters such as Amazon, Apple, Facebook and Google have all greatly expanded their lobbying operations. Many tech firms, notably Facebook and Apple, pay minimal taxes, meaning they have a strong stake in defending their current privileges . They also have reason to work to make it difficult to protect the privacy of netizens since so much of their profit depends on selling personal information to corporations.

    This fluency with data has also made the Left Coasters critical contributors of campaign expertise for President Obama and other Democrats. Now they are starting to fund the next generation of pliable favorites, most recently Newark Mayor and senatorial aspirant Cory Booker.

    The rise of the Left Coast oligarchs will likely accelerate the extinction of the traditional working-class Democratic Party. Bezos and other Left Coasters tend to be progressive on social issues, but vehemently opposed to unions, here and abroad.

    Bezos and other online retailers will need to defend themselves against attacks on the job-destroying aspects of their shops; since 2003 there has been a loss of roughly 800,000 retail jobs while the electronic side of the industry has generated less than 180,000.

    Mark Zuckerberg and others leading the charge for immigration reform also have an interest in assuring a steady supply of lower cost, lower hassle “techno-coolies” for their software shops.

    This may not endear the oligarchs to a large part of American middle class who would prefer those jobs go to themselves, or their children. Left Coasters also embrace green policies that entail high energy prices, arguably more acceptable in the mild, if a bit, wet climate of the Left Coast but economically disadvantageous to far less temperate middle America.

    Conservatives, for their part, hope that the Left Coast moguls prove more libertarian than statist. But they may miss the fundamental law of oligarchy: when a company dominates a sector, they usually seek to use the government to consolidate their position. Google and other tech firms, for example, have been more than happy to feed off the crony capitalist trough — for example in backing renewable energy schemes — when opportunity strikes.

    What’s the Future?

    Demography is working against the East Coast, now the oldest part of the country, with the smallest population under 20. The region’s aging population will likely blunt innovation there. In contrast, despite high housing prices, the Left Coast’s population grew 10%  in the last decade compared to 6% for the Northeast; Census projections to 2023 suggest the Northeast will continue to lag as well over the next ten years.

    As urban analyst Aaron Renn has noted, Seattle, Portland and San Francisco also boast a very politically incorrect advantage. Despite their worship at the altar of diversity, these cities have smaller populations of African-Americans and Latinos, who tend to be more economically disadvantaged. The Northeast is three times as black as the Left Coast. In contrast, the Left Coast’s largely upwardly mobile Asians account for 15% of the local population, three times their proportion on the East Coast.

    The Left Coast also enjoys by far the highest concentration of people engaged in STEM jobs — roughly 50% higher the national average. Since 2005 STEM employment has expanded by double-digit percentages in Seattle, San Jose and San Francisco, compared to much more modest gains in New York and Boston. In some fields like e-tailing, the Left Coast, not surprisingly, dominates, with Seattle and San Jose leading the way.

    Given the current economic trajectory, more traditional East Coast dominated-industries — from brick and mortar retail to publishing and media — can be expected to crumble before the onslaught of the Bay Area and Seattle. The old cities of the East may hold their social prestige and legacy well into the current century, but the blue balance of power seems destined to keep tilting toward the Left Coast.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    This piece originally appeared at Forbes.

    Facebook photo by BigStockPhoto.com.

  • Entrepreneurs Turn Oligarchs

    For a generation, most Americans, whatever their politics, have largely admired Silicon Valley as an exemplar of enlightened free-market capitalism. Yet, increasingly, the one-time folk heroes are beginning to appear more like a digital version of President George W. Bush’s “axis of evil.” In terms of threats to freedom and privacy, we now may have more to fear from techies in Palo Alto than the infinitely less-competent retro-Reds in North Korea.

    Once, we saw the potential unsurpassed human liberation available through information technology. However, Silicon Valley, as shown in the NSA scandal, increasingly has become intimately tied to the surveillance state. Technology has enabled powerful firms – including Verizon, Apple, Facebook, Microsoft and Google – to channel everyone’s email and cellphone calls to the national security apparatus.

    “It’s as bad as reading your diary,” Joss Wright, a researcher with the Oxford Internet Institute, recently told the Associated Press, adding, “It’s far worse than reading your diary. Because you don’t write everything in your diary.”

    Nor does the snooping relate only to national security. If my emails to friends and family arguably constitute a potential threat to national security, that’s one thing. The massive monitoring and largely unapproved tapping into our data for profit is quite another.

    Google, which, in the first half of 2012, took in more advertising dollars than all U.S. magazines and newspapers combined, has amassed an impressive list of privacy violations, notes the Huffington Post. Even the innocent-seeming Gmail service is used to collect and sell information; Google’s crew in Palo Alto may know more about the casual user than most of us suspect.

    Even Apple, arguably the most iconic Silicon Valley firm, has been hauled in front of courts for alleged privacy violations. For its part, Consumer Reports recently detailed Facebook’s pervasive privacy breaches, including misuse of information as detailed as health conditions, details an insurer could use against you, when someone is going out of town (convenient for burglars), as well as information pertaining to everything from sexual orientation to religious and ethnic affiliation.

    Despite ritual denials about such invasions of privacy, the new communications moguls have little reason to stop, and lots of financial reasons to continue. As for concerns over privacy, the new oligarchs take something of a blasé attitude. Eric Schmidt, Google’s chairman, in 2009 responded to concerns over privacy with this gem: “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.”

    First came the engineers

    These autocratic sentiments have evolved over time. Initially, Silicon Valley was dominated by engineers whose primary obsession was using information technology to make the physical world work better. Many of them from Midwestern schools, that early workforce came to the Santa Clara Valley for the same suburban, middle-class lifestyle that earlier brought millions to the aerospace hubs of the Los Angeles Basin and Long Island. They may have been nerds, but not a class apart.

    The early Valley deserved our admiration for taking new technologies – semiconductors, in particular – and applying them to practical concerns ranging from machine tools to spacecraft and defense. The Internet itself was not invented by swashbuckling entrepreneurs but evolved from the Pentagon’s Defense Advanced Research Projects Agency – DARPA. Eric Schmidt and Mark Zuckerberg did not pay to build the Internet; the taxpayers did.

    The new Valley elite are simply the latest to refine and exploit information technology for their own, often enormous, personal benefit. Nothing wrong with making money, to be sure, but this ambition is no different than those of Cornelius Vanderbilt, E.H. Harriman, J.P. Morgan, Andrew Carnegie, John D. Rockefeller, Henry Ford and Thomas Watson. Each innovated in a key industry, established oligarchic control and became fantastically rich.

    But even by the standards of bygone moguls, the new oligarchs’ wealth has not been widely shared. Big Oil and the Big Three automakers created hundreds of thousands of jobs for a wide range of workers. In contrast, the tech oligarchs’ contributions to American employment are relatively negligible.

    Google, for example, employs 50,000 people; Facebook, 4,600; Twitter, less than a thousand, while GM employs 200,000; Ford, 164,000; and Exxon, more than 100,000. Even in the current boom, new job creation has been relatively insipid. From 1959-71, Silicon Valley produced 100,000 tech jobs; by 1990 it generated an additional 150,000 and, in the 1990s boom, another 170,000. After losing more than 108,000 high-tech jobs from 2000-08, there has been a net gain of no more than 20,000 to 30,000 positions since 2007.

    The geographical area enriched by the oligarchs has also narrowed. In previous Silicon Valley booms, outlying areas such as Sacramento and Oakland also benefited; not so much this time. Nor is the population expanding much, as one would expect from an economic boom. Although the massive outflow of domestic migrants over past decade – more than 20,000 annually – has slowed, still, more domestic migrants are leaving than coming. Part of this has to do with having the nation’s highest housing prices relative to income, more than twice that of competitor regions like Austin, Texas, Raleigh, N.C., or Salt Lake City.

    Rather than a place of aspiration, the Valley increasingly resembles an extremely expensive gated community, with prices set impossibly high particularly for all but the most affluent new entrants.

    What Needs to Be Done?

    Americans need to wake up to the reality of this new, and increasingly ambitious, ruling class. “The sovereigns of cyberspace,” like the all-powerful Skynet computer system in the “Terminator” series, are only recently focused on politics, and have concentrated largely in the Democratic Party (where the price of admission tends to be cheaper than in the old-money-dominated GOP). And it’s not just money they are throwing at the game, but also the skillful political use of technology, as amply demonstrated in President Obama’s re-election.

    Like the moguls of the early 20th century, who bought and sold senators like so many cabbages, the new elite constitute a basic threat to democracy. They dominate their industries with market shares that would make the old moguls blush. Google, for example, controls some 80 percent of search, while Google and Apple provide the operating system software for almost 90 percent of smartphones. Similarly, more than half of Americans, and 60 percent of Europeans, use Facebook, making it easily the world’s dominant social media site. In contrast, the world’s top 10 oil companies account for barely 40 percent of the world’s oil production.

    Like the Gilded Age moguls, the tech oligarchs also personally dominate their companies. Sergey Brin, Larry Page and Eric Schmidt, for example, control roughly two-thirds of the voting stock in Google. Brin and Page each is worth more $20 billion. Larry Ellison, the founder of Oracle, owns just under 23 percent of his company; worth $41 billion, Forbes ranked him the country’s third-richest person. Bill Gates, the richest, is worth a cool $66 billion and still controls 7 percent of his firm. Newcomer Mark Zuckerberg’s 29.3 percent stake in Facebook was worth $16 billion as of July 25, according to Bloomberg.

    This combination of market and ownership concentration needs to be curbed. Taking a page from the Progressive Era, author and historian Michael Lind suggests that companies like Google, given their enormous market share, should be regulated like utilities. Others, within the European Union and elsewhere, look to apply antitrust legislation, once used to break up Standard Oil. One innovative approach, as Jaron Lanier suggests in his new book, “Who Owns the Future,” includes forcing companies to pay for the privilege of using your data, thereby “spreading the wealth” from a few hegemons to the wider populace.

    Threat is bipartisan

    These changes will require both Left and Right to change their attitudes. Progressives, for example, have tended to embrace the Valley’s population for its generally “liberal” views on social issues and the environment. They have largely ignored the industry’s poor record on hiring non-Asian minorities and the lavish, energy-consuming lifestyles of the oligarchs themselves.

    Some on the left are seeing the light. Britain’s left-leaning Guardian newspaper has been in the forefront unveiling the NSA scandals and the complicity in them of the tech giants. Credit belongs to the EU, which, particularly in contrast with our government, has been asking the toughest questions about loss of privacy and the dangers of oligopolistic control. With Barack Obama secure in the White House, some American leftists have also begun to recognize the extreme inequality that has accompanied, and likely been worsened by, the ascendency of the digital aristocracy.

    Conservatives, for their part, can only face up to the new “axis of evil” by stepping outside their ideology strictures and instinctive embrace of wealth. The increasingly monopolistic nature of the high-tech community, and its widespread disregard for the privacy of the individual, should concern conservatives, as it would have the framers of the Constitution.

    What needs to be accepted, by both conservatives and liberals, is that privacy matters, as does the threat posed to democracy by oligarchy. Until people focus on the potential for evil before us and discuss ways to curb abuses, this small and largely irresponsible class, likely in league with government, will usher in not the promised cornucopia but a gilded-age reign of Big Brother.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    This piece originally appeared in The Orange County Register.

    Official White House Photo by Pete Souza.

  • Should Uncle Sam Chase a Scandinavian Model?

    When American progressives dream their future vision of America, no place entices them more than the sparsely populated countries of Scandinavia. After all, here are countries that remain strongly democratic and successfully capitalist, yet appear to have done so despite enormously pervasive welfare systems.

    Paul Krugman, the current high priest of progressive economics, approves of Sweden’s high level of spending on benefits as an unadulterated economic plus. He says that Sweden, unlike other European states like France, thrives despite its high tax rate and notes that, while half of all children are born out of wedlock, those children have far less poverty than American children. Progressive pundit Richard Florida, for his part, claims that Sweden is the most creative place on Earth, just ahead of the U.S.

    Some even suggest America should adopt wholesale the Scandinavian system as a policy imperative. The Washington Post praises Sweden as the “rock star” of the financial crisis and lists five ways the U.S. could learn from Sweden. ThinkProgress lauds Sweden’s ability to achieve the world’s highest rate of “social progress” despite a lower per capita income than the U.S. Writer David Dietz, contributor to PolicyMic, sees countries such as Sweden, Norway and Denmark as models that can guarantee both future economic growth and a way for America “to regain its global edge and cement its economic dominance.”

    But before we all go out drinking aquavit, shouting “skol” and dyeing our hair blonde, it makes sense to recognize that not only is relatively small, historically homogenous Scandinavia an ill-suited role mode for a megapower like the U.S., but that, in many ways, the Nordic system may be far more limited than its admirers here might acknowledge.

    Of course, it’s not that there’s not something to learn from these or other countries. Certainly Europe’s chilly corner seems in much better shape than the rest of the continental mess. Given today’s circumstances, recent books extolling the EU as a model such as Stephen Hill’s “Europe’s Promise” or Jeremy Rifkin’s “The European Dream” seem just slightly absurd.

    In truth, Scandinavian countries have performed better than the dismal continental norm in large part because, with the exception of recession-wracked Finland, they have stayed out of Euro currency.

    But even those outside the Euro-destruct zone are not doing as well as widely asserted. Overall unemployment in Sweden, at 8.4 percent, is also higher than that of the U.S.

    Even Norway is underperforming. The last quarter its GDP grew .3 percent, down from an expected .8 percent. As long as mainland Europe is gripped by negative growth and record unemployment, export-oriented Scandinavian countries will continue to struggle.

    In addition, not all the reasons for Scandinavia’s relative health are those that would warm the heart of U.S. progressives. These countries, led by Sweden, have reformed many aspects of their welfare state, including such things as labor laws, and reduced taxes in ways that make them more competitive – and far less egalitarian than in the past.

    Another positive factor for Scandinavia lies in their exploitation of resources, something many progressives, notably green policy aficionados, tend to view with disdain. Sweden exports loads of iron ore to drive its economy and employs massive dams to drive hydropower, which accounts for 42.8 percent of their energy. Norway benefits from a gusher of oil and gas that, producing nearly 2 million barrels of oil per day, making it the 14th largest oil producer in the world despite having a population of 5 million. If anything, Norway can be a model socialist economy because its economic base resembles the Nordic enclave of North Dakota. Overall, the tiny country produces nearly 15 times as much oil per person than the U.S.

    There’s also the matter of scale. Demographically, Scandinavia’s population is microscopic compared to our far vast multi-ethnic Republic. Taken together the four Scandinavian countries – Finland, Denmark, Sweden and Norway – are home to barely 26 million people, far fewer than California and about the same as Texas. These hardy souls are widely dispersed. The population density of Norway and Finland is roughly half that of the U.S., while that of Sweden is one-third less.

    Sweden, to put things in perspective, has fewer people than Los Angeles County. Norway and Finland are less populous than Minnesota, which is about the closest thing we have to Scandinavia. The Minneapolis-Saint Paul region, with 3.6 million residents, would be by far the biggest urban area in the region. Overall American Nordics, including those of mixed ancestry, total 11 million, more than the population of Sweden, by far the region’s largest country.

    Scandinavia’s greatest strength may lie in its least political correct asset: its Nordic culture. Scandinavians’ traditional interest in education, hard work and good governance serves them well both at home and abroad. It’s not socialism that is primarily responsible.

    After all, America’s Scandinavians, although largely the descendents of poor immigrants also are pretty successful, earning more on average than their counterparts back home.

    A Scandinavian economist, for example, once stated to Milton Friedman: “In Scandinavia, we have no poverty.” To which the caustic Nobel Prize winner replied: “That’s interesting, because in America among Scandinavians, we have no poverty, either.” Indeed, the poverty rate for Americans with Swedish ancestry is only 6.7 percent, half the U.S. average which is on par with the poverty rate at home.

    Yet these cultural attributes, notes Swedish based commentator Nima Sanandaji, now appear to be eroding in part because of rising immigration. Long highly homogeneous, the Nordic countries – notwithstanding their liberal kumbaya rhetoric – are facing huge problems absorbing immigrants. Despite populations that are more than 90 percent native, there is growing unease about concentrations of largely Muslim immigrants around large cities like Copenhagen, Malmo and Stockholm.

    These immigrants are not doing remotely as well as those counterparts in the U.S. or Canada. Unemployment rates can reach as high as 80 percent among African and Middle Eastern immigrants in Scandinavia.

    In May, there was a major riot in Stockholm’s heavily Muslim, dense and highly planned inner suburbs. Many immigrants do not seem to embrace the Scandinavian ethos that having strong welfare system available does not mean people should take undue advantage of it.

    More troubling still, notes Sanandaji, who is of Swedish-Kurdish ancestry, many young Scandinavians also seem to be rejecting the old Nordic social compact. Increasing numbers of people under 40 are retiring early, citing disabilities and sickness.

    These trends point to serious problems for countries whose birthrates, despite widely praised natalist policies, are dropping and generally are below ours. With immigration growing ever more unpopular, further demographic decline in the Nordic countries seems inevitable.

    As a result, the Scandinavian welfare state faces challenges arguably far worse than those here at home. The Bank of Finland, for example, warns that an aging population and large public debt would cause a “risk that Finland will drift onto a path of fading economic growth, persistently high unemployment and deteriorating public finance.”

    To be sure, America faces many of these same problems, but it seems silly to look for solutions in a region of the world that is not only fundamentally different but also faces equal, or even greater challenges. Rather than adopt solutions forged in the Nordic cold, American progressives would do better to hone their prescriptions to meet the illnesses of the very different patient here at home.

    Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

    This piece originally appeared at The Orange County Register.

  • Is the “Rust Belt” a Dirty Word?

    Many people hate the term “Rust Belt”. They dislike the aesthetics of the Rust Belt. For others, the term is less loaded, but rather a moniker denoting who we are. Consider me in the latter camp. But I often cross paths with those who loathe the term, or more exactly any notion of there being a Rust Belt culture.

    For instance, I recently ran into a top official for the City of Cleveland. We shook hands, discussed backgrounds, before the individual put a name to a book I co-edited called Rust Belt Chic: A Cleveland Anthology, which is a collection of stories detailing what it means to be a Clevelander, a Rust Belter. The official let on she didn’t care for the term “Rust Belt”, and in fact found the idea of celebrating a Rust Belt culture backwards and distasteful. I told the official there was a new generation taking ownership of having grown up in a post-industrial reality, and that make no apologies for it. The official insinuated those people are not in positions of power, so what does it matter. I responded in ten years many will be, and so it matters a lot.

    Anyway, the conversation stayed with me for a few weeks, if only because it was a living, breathing example of what needs to go in Cleveland, if not the whole of the Rust Belt; namely, shame and false pride. Both characteristics go together. Said philosopher Lao Tzu:

    Pride attaches undue importance to the superiority of one’s status in the eyes of others; And shame is fear of humiliation at one’s inferior status in the estimation of others. When one sets his heart on being highly esteemed, and achieves such rating, then he is automatically involved in fear of losing his status.

    Shame. It’s pretty thick in these parts, and it’s linked to the region’s nickname, “The Rust Belt”. After all, rust connotes disuse, or of being left behind. Yet we are only shameful because the region did have status. We were a proud region once, as our forefathers and foremothers built this country. They protected this country. They enabled the defeat of Hitler. No hyperbole on that last part.

    Specifically, before being the “Rust Belt” the region was the “Arsenal of Democracy”, which was a term coined by Detroiter Bill Knudsen in his conversation with a weary and worried President Roosevelt on the eve of WWII. At the time of the talk, May 28th, 1940, America had the 18th largest army in the world, and so what FDR needed from Knudsen was reassurance Detroit’s industrial infrastructure could produce weapons at a pace unimaginable. Knudsen replied Detroit’s manufacturing might could transform into the country’s “Arsenal of Democracy”, with term eventually gaining traction in an FDR fireside chat dated December 29, 1940. In it, the President states:

    We must be the great arsenal of democracy. For us this is an emergency as serious as war itself. We must apply ourselves to our task with the same resolution, the same sense of urgency, the same spirit of patriotism and sacrifice as we would show were we at war.

    Obviously, the area succeeded, with Pittsburgh having produced one-fifth of the Allied forces steel from 1940 to 1945 alone.



    Courtesy of Seeking Michigan

    Needless to say, the region has had a lot to be proud of. But then macroeconomic forces took hold. Things globalized, and thus the way we lived and the things we did became obsolete. Shit happened. Shit is still happening. Yet part of the reason this is so is because we cannot let go. Being proud turned into stubborn pride, particularly for the region’s leadership who is hanging on to the illusion that yesterday will happen as long as we adhere to the same thought processes and power structures that held tow during the region’s heyday. But then yesterday doesn’t happen. Year after year it doesn’t happen. The pride becomes desperation. The pride becomes false. Said William Blake:

    Shame is pride’s cloak.

    And so with the collective shame comes collective temptation and desperation. Casinos will save the cities. Convention centers will save the cities. If only the cities will beautify enough. If only we had an outdoor chandelier. Or a suburban-type downtown mall. Or a tech district. Or a critical mass of microbreweries and boutiques. Or whatever anyone else doing. Anyone else, but us.

    Meanwhile, such city transformations erode the region’s true competitive advantage, which is who we are, and the various potentials inherent in our ability to persevere, i.e., our “learned resilience”. Writes Erie, PA native and economic development blogger Jim Russell:

    What I mean is seeing opportunity hiding in a community struggling with survival. There’s just something about Youngstown that stirs passion in me. I’m not gawking at ruin porn or glossing over everything that is wrong. I love Rust Belt cities. I love Rust Belt culture. I’m proud to be from the Rust Belt. That’s what Rust Belt Chic now means to me. It’s personal. It’s who I am. For Pittsburgh, I could sense the tide turning. I see the same transformation taking place in other Rust Belt cities. A pejorative, Rust Belt-ness is an asset. It’s a starting point for moving forward, not a finish line or a civic booster campaign.

    There is indeed a growing movement of Rust Belt pride taking hold. Yet it is not a false pride, rather a pride that’s derived from an acceptance of having become rust. Such can be immeasurable for the psychogeography of the region. After all, says William James,

    Acceptance of what has happened is the first step to overcoming the consequences of any misfortune.

    Richey Piiparinen is a writer and policy researcher based in Cleveland. He is co-editor of Rust Belt Chic: The Cleveland Anthology. Read more from him at his blog and at Rust Belt Chic.